Rio Tinto and BP sued for £535m over Indonesian project

Saeed Shah
Thursday 18 October 2001 00:00 BST
Comments

Rio Tinto and BP are being sued for $776m (£535m) by a regional government in Indonesia, which is also seeking to seize their Kaltim Prima Coal joint venture in the south-east Asian country.

The East Kalimantan regional government is claiming the British companies have failed to honour an agreement with the central government in Jakarta to divest 51 per cent of KPC in tranches by 2001 to local investors.

Rio Tinto admitted that no interest in KPC, a coal mining business in East Kalimantan, had been sold on. It said that in 1996 and 1997 it had not been practical to proceed with the divestments due in those years, while in 1998, 1999 and 2000 there were no takers for the shares on offer.

This year KPC planned to sell the whole 51 per cent but it had so far been unable to agree a price for the shares with the central government.

"KPC believes that the claims are baseless and intends to defend them vigorously to the full extent of the law," the Rio-BP joint venture said.

Sources at KPC said the company was surprised the move came from the regional government, through the District Court of South Jakarta, as its agreement was with the national administration, which was not party to the action.

It is thought that East Kalimantan wants the shares to be offered only to investors from the province, rather than across the country.

KPC further warned: "The action taken by the regional government will cause concern to all existing and potential investors in East Kalimantan specifically and Indonesia as a whole, and may deter future investment in the country."

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in