Samarinda court revokes govt?s agreement with KPC

The district court in Samarinda, East Kalimantan has revoked the government?s agreement with Kaltim Prima Coal on the divestment of the coal producer?s 51 percent share as requested by two local companies Perusda Melati Bhakti Satya and Perusda Pertambangan dan Energi, Bisnis Indonesia reported on Friday.

Prusda Melati Bhakti which is owned by the East Kalimantan provincial administration and Perusda Pertambangan dan Energi which is owned by the Kutai regency authority demanded the court to revoke that the agreement, which they charged, was against the existing law.

According to Judge A. Th, Pudjiwahono, the so called framework agreement which was signed by the Minister of Energy and Mineral Resources and KPC?s management as a basic framework in the divestment of the coal producer? shares had no legal power. The agreement should be cancelled because it was against the law, the judge added.

The two companies said that the agreement was made to eliminate their chance to buy larger part of the shares that would be divested by KPC which operates massive coal mining areas in the province. The local government has demanded the ministry to allow the two companies to take over all the 51 percent shares that would be divested by KPC but the request was rejected. The local government is instead allowed only to buy 31 percent of the shares and the other 20 percent is given to state owned companies.

KPC is equally owned by world mining giants Rio Tinto and BP. Under its contracts of works, the company?s shareholders are required to divest 51 percent of their shares to local investors.

The mandatory divestment program has been delayed for several times due to a dispute over the percentage of the shares that must be sold to the local government. The local administration which demands to buy the entire 51 percent stake, will team up with Perusda Melati Bhakti Satya and Perusda Pertambangan dan Energi to take over the shares. (*)