East Kalimantan seeks $776m from KPC
East Kalimantan seeks $776m from KPC
The Jakarta Post, Jakarta
The East Kalimantan administration demanded on Tuesday that
the South Jakarta District Court order coal mining giant PT
Kaltim Prima Coal (KPC) and its shareholders to pay $776 million
in compensation and annul the company's contract of works for
breaching an agreement to divest shares.
The administration's lawyer, Ibrahim Senen, told the first
hearing of the legal battle that KPC had seemingly refused a
divestment of its shares to the Indonesian government or
citizens.
"KPC failed to show its good faith by continuing to postpone
the divestment, claiming that there has not been any agreement
about the size of the divestment and the share price," Ibrahim
told the hearing, presided over by IDG Putra Jadnya.
He noted that the $776 million was a calculation of the
potential losses inflicted by KPC shareholders' failure to divest
their shares.
Meanwhile, a lawyer for KPC, Todung Mulya Lubis, regretted the
East Kalimantan administration's decision to file a lawsuit,
saying that it would jeopardize foreign investment in Indonesia.
"KPC postponed the divestment because the government agreed to
do so," he told The Jakarta Post.
KPC, equally owned by Rio Tinto of Australia, through Sangatta
Holdings Limited, and BP of Britain, operates a large coal mining
field in East Kutai regency, East Kalimantan.
Under its contract of works, KPC was required to divest its
shares in stages starting in 1996, four years after the company
commenced its operations in 1992.
As of this year, KPC shareholders should have divested a 51
percent stake to local entities, but have yet to divest a single
share.
KPC shareholders have actually offered the 51 percent stake
for sale at a price of over $400 million, while the East
Kalimantan administration -- the sole party that has bid for the
shares -- offered below $300 million.
Several attempts at negotiations between the two parties have
been held, often with mediation from the central government, but
they have not been able to arrive at an agreed price.
The prolonged negotiation process frustrated the East
Kalimantan administration, which then decided to take the case to
the court.