Legal dispute stalls coal producer Kideco?s divestment plan

Thursday, June 5 2003 - 03:58 AM WIB

A legal dispute with the provincial administration of East Kalimantan has stalled the process of the mandatory divestment of coal mining firm Kideco Jaya Agung, Bisnis Indonesia reported on Thursday.

Director General of Geology and Mineral Resources at the Ministry of Energy and Mineral Resources, Mahyuddin Lubis, confirmed on Wednesday that Kideco?s plan to divest 34 percent of its shares had been stopped due to the legal dispute with the provincial government.

Meanwhile legal consultant of Kideco, Fredrik J. Pinakunary, an associate of the Lubis, Santosa and Maulana law office, said that the decision of the Samarinda court to sequestrate the company?s shares in favor of the local government?s request on April 15, this year had effectively stopped the divestment process.

?If Kideco continues to offer the shares, while they are still under the court?s sequestration, the company?s management may be jailed up to five years,? he said.

According to the company?s contract of work, the company should gradually divest up to 51 percent of its shares to either the Indonesian government, Indonesian investors after 20 years of its commercial production. Last year, the company was required to sell 34 percent of its shares as part of the mandatory divestment program but the offer did not receive positive response from local investors.

PDD Dermawan, the legal consultant of the East Kalimantan provincial administration said that Kideco?s share divestment should have already reached 51 percent of the total shares.

Unlike the company?s legal consultant, Dermawan said that the legal dispute should not affect the divestment process. He hoped that the company would still be able to divest the share to the government as stated in the work of contract, and the government then appoints its buyers to purchase the share. (*)

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