Province revokes lawsuit over KPC divestment

The Jakarta Post, Jakarta

The East Kalimantan provincial administration has withdrawn its lawsuit against the central government concerning the disputed divestment of a 51 percent stake in PT Kaltim Prima Coal (KPC).

However, the administration remained defiant, saying it would continue with proceedings against KPC, a company equally owned by Anglo-Australian mining group Rio Tinto and Anglo-American energy giant BP Plc.

Kasyful Anwar Sa'ad, deputy chairman of the provincial council, said the decision was made during a plenary meeting, which was attended by top officials from the provincial administration, East Kutai regency and local councils.

Kasyful said the East Kalimantan administration insisted on continuing the lawsuit against KPC on the grounds that it doubted "the company's goodwill" in the divestment of its 51 percent stake worth US$419 million.

The province has been trying many ways to acquire the stake, including filing a lawsuit against the company in the South Jakarta District Court.

Under its contract, KPC has to divest 51 percent of its stake to either the government, state-owned companies, Indonesian- controlled private firms or Indonesian nationals after ten years of operation. But, KPC insists there is no clause in its contract stipulating that the stake must be sold to the province.

"Therefore, it's better if we let the court decide, so that any decision by the court would have a strong legal basis," Kasyful was quoted by the Antara news agency as saying.

The fresh decision by the province followed a recent threat by the central government to file an "intervention lawsuit" asking the court to drop the trial of the case.

The dispute has raged for four years, and there is no sign that it will end soon.

The East Kalimantan administration has thus far gained some "victory" in the legal battle as the court had decided to sequester the Indonesian assets of BP and Rio Tinto pending the final judgment of the case.

KPC insists that it would not divest its stake unless the province revokes its lawsuit.