East Kalimantan files legal suit against KPC<\/p>\n
Moch. N. Kurniawan, The Jakarta Post, Jakarta<\/p>\n
The East Kalimantan administration has filed a civil suit
\nagainst coal mining giant PT Kaltim Prima Coal (KPC) over delays
\nin the firm's divestment program.<\/p>\n
KPC said that the legal suit was filed by the East Kalimantan
\ngovernment at the South Jakarta District Court, requesting that
\nthe company pay some US$772 million in damages and another $4
\nmillion for legal costs.<\/p>\n
The claim has also been made against KPC shareholders, some of
\nits directors and legal advisers.<\/p>\n
The provincial administration also asked the court to seize
\nKPC assets.<\/p>\n
\"We were informed by the court about the civil suit early this
\nmonth and were summoned to attend the first trial on Oct. 23,\" PT
\nRio Tinto Indonesia spokeswoman Nunik Maulana told the Jakarta
\nPost.<\/p>\n
Anglo-Australia mining group Rio Tinto and British-American
\noil and gas firm BP have equal ownership in KPC.<\/p>\n
Nunik said the legal suit had no grounds and the company
\nintended to defend itself vigorously to the full extent of the
\nlaw.<\/p>\n
Nunik added that KPC would remain committed to continuing its
\ndivestment program despite the charges.<\/p>\n
However, she said, the action taken by the local government
\nwould create anxiety among investors in the whole country and
\ncould deter future investment.<\/p>\n
KPC is obliged to divest a 51 percent stake to the East
\nKalimantan provincial administration. The divestment program was
\nsupposed to be completed by the end of this year but due to a
\nprotracted dispute over the price, the central government and KPC
\nrecently agreed to delay the deadline until March 2002.<\/p>\n
KPC has set the price for its 51 percent stake at US$448.8
\nmillion, while the East Kalimantan provincial administration is
\nonly willing to pay $319 million.<\/p>\n
KPC operates a huge coal mine in Sangatta, East Kutai regency,
\nEast Kalimantan, which produced 13.5 million metric tons of coal
\nlast year. KPC is regarded as producing some of the best quality
\ncoal in the world.<\/p>\n
KPC was required to gradually divest its stake to local
\ninvestors from 1996 but various problems have resulted in the
\nprogram being continually delayed.<\/p>",
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