Govt urged to speed up KPC divestment
Govt urged to speed up KPC divestment
Kurniawan Hari, The Jakarta Post, Jakarta
The House of Representatives urged the government on Monday to
complete the protracted divestment program of giant coal mining
firm PT Kaltim Prima Coal (KPC) before the end of the year.
Deputy chairman of House Commission VIII for mines and energy
Emir Moeis said that the government must quickly resolve any
disputes as further delays would only create business
uncertainty.
"The government must quickly solve problem of the divestment
of KPC," Emir said after presiding over a hearing with KPC, East
Kutai administration and the East Kalimantan administration.
KPC, which is equally owned by Anglo American energy giant BP
and Anglo Australia Rio Tinto mining group, is obliged to divest
up to 51 percent of the company to local investors. The East
Kalimantan administration gets first priority as KPC's vast
mining site is located in Sangatta, around 170 km north of
Samarinda, the capital of East Kalimantan.
But the divestment program has been delayed several times for
various reasons, with the latest being disagreement over the
share price. This problem has prompted the government to extend
again the divestment deadline to March 2002.
The East Kalimantan administration has filed a lawsuit at the
South Jakarta Court against KPC for the delay.
KPC shareholders have offered to sell a 51 percent stake for
over US$453 million, while the East Kalimantan administration --
the sole party that has bid for the shares -- has offered below
$320 million.
The government has said that based on the existing mining
contract of work, any dispute on the divestment price should be
resolved by an independent appraisal. If after this the problem
continues to be unresolved, the last option is to bring it to
international arbitration panel.
Elsewhere, Emir said that the House supported the intention of
East Kalimantan to buy KPC, but several legislators were
suspicious over the financial source of the administration.
Commenting on the suspicion, speaker of East Kalimantan
legislative body Sukardi Jarwoputra simply said that his region
was wealthy enough to buy the KPC shares.
Emir confirmed that the House considered setting up a team
tasked to trace the source of the regional financing.
According to its contracts of work, KPC was required to divest
its shares in stages starting in 1996, four years after the
company commenced 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 produced 13.5 million metric tons of coal last year. Its
coal is regarded as some of the best in the world.