Press Statement: KPC says East Kalimantan lawsuit baseless
Tuesday, November 27 2001 - 09:12 AM WIB
The claim has been made against KPC, its shareholders, some of its directors and its legal advisers.
The East Kalimantan Regional Government is seeking damages of US$776 million. This comprises $144m in respect of a share of KPC's past profits, $628m in respect of a share of future profits to be earned over the next 10 years and legal and travel costs of US$4 million. The East Kalimantan Regional Government has also requested seizure of KPC's and the other defendants' assets.
KPC firmly believes that the claims are baseless and intends to defend them vigorously to the full extent of the law. The firm of Lubis, Santosa and Maulana has been retained to act on behalf of KPC and its shareholders, and the directors named in this case.
The following points are relevant to this matter:
- KPC's operations in Indonesia are carried out under a contract between KPC and the Government of Indonesia, as represented by the Minister of Energy and Mineral Resources. The contract is known as the Coal Agreement. As a party to the Coal Agreement, the Central Government is fully aware of all aspects of the divestment process.
- The East Kalimantan Government has no legal standing to bring this action because they are not a party to the Coal Agreement.
- The District Court of South Jakarta does not have jurisdiction over this case. In accordance with Indonesian law, any dispute between parties in an agreement must be resolved through arbitration if the agreement contains such a clause, which is the case with the Coal Agreement between the Indonesian government and KPC.
- KPC has always acted in good faith in the matter of divestment and has complied with the terms of the Coal Agreement. KPC has already made three divestment offers to a number of Indonesian parties from 1998 through 2000.
- In May this year, KPC agreed to offer 51 % of its shares for sale in 2001, instead of 44% as had been previously agreed with the Government. The Ministry of Energy and Mineral Resources and KPC are currently in the process of determining the price for the 2001 offer.
- Minister Purnomo has advised recently that he has approached President Megawati and the Ministry of Finance for the necessary approvals to proceed with the appointment of an independent valuer to represent the Indonesian Government in this matter. This is a positive step forward toward finalising the KPC share price for the 2001 divestment offer and is consistent with the provisions of the Coal Agreement.
KPC remains committed to fulfilling all of its obligations under the Coal Agreement and will continue to pursue the divestment process in an open and transparent manner in full accordance with the process laid out in the Coal Agreement.
Background:
KPC operates a giant coal in Sangatta, East Kalimantan, and is jointly owned by Anglo-Australian mining giant Rio Tinto and Anglo-American energy giant BP Plc. (robert)