Govt vows to intervene in KPC legal dispute
The Jakarta Post, Jakarta
The central government is set to intervene in the legal battle between East Kalimantan-based coal mining giant PT Kaltim Prima Coal (KPC) and the provincial administration in a bid to put an end to the long-running fiasco in the divestment of the KPC stake by shareholders.
Secretary-general of the mines and energy ministry Djoko Darmono said that the government would file an "intervention lawsuit" if the East Kalimantan government did not withdraw its lawsuit against KPC by the end of this month.
"The intervention suit is probably not a popular step, but it is the only way to ensure that the divestment of the 51 percent stake in KPC can materialize quickly," he was quoted by Antara as saying.
KPC is equally owned by Rio Tinto mining group and BP Plc. energy giant. The two shareholders are required to divest a controlling stake in the company to local investors.
But the divestment program has been delayed due to various problems. The latest was the lawsuit filed by the East Kalimantan administration at the South Jakarta District Court against KPC and its shareholders. The Court then ruled in favor of East Kalimantan, ordering the sequester of shareholders' assets including the KPC stake that must be unloaded.
There have been rising calls for the government to intervene and overturn the court's ruling.
The KPC shareholders were supposed to divest a 51 percent stake in the company by the end of June, but it had to be delayed again because of the court's ruling. The new deadline for the divestment program is end of July.
KPC has noted that it would not carry out the divestment, unless the provincial administration revoked the litigation process.
Under its contract with the central government, KPC must divest 51 percent shares to local investors which may either be the Indonesian government, state-owned companies, Indonesian- controlled private firms or Indonesian citizens after 10 years of production.
Problems began when the East Kalimantan administration demanded it be given preference as a bidder for the KPC stake.