KPC, govt agree to delay divestment

KPC, govt agree to delay divestment

The Jakarta Post, Jakarta

JAKARTA: Coal mining company PT Kaltim Prima Coal (KPC) and
the government have agreed to extend to July 31 the deadline for
the divestment of a 51 percent stake in the company.

Under a previous agreement with the government, KPC was to
have sold the 51 stake by the end of June.

KPC, which is equally owned by Anglo-Australian mining giant
Rio Tinto and Anglo-American energy firm BP Plc, operates a large
coal mine in Sangatta, East Kalimantan. Under its contract with
the government, the firm must sell 51 percent of its shares to
either the Indonesian government, state-owned companies,
Indonesian-controlled private firms or Indonesian citizens after
10 years of production.

KPC said in a statement the price for all its shares remained
unchanged at US$822 million, as earlier agreed upon by the
company and the government.

It did not mention the price for the 51 percent stake, but it
earlier said the stake was valued at $419 million.

The East Kalimantan provincial administration has been
aggressive in its efforts to secure the 51 percent stake, but the
price it offered was judged unreasonably low by KPC. This
disagreement over the price has led KPC to delay the divestment
of the stake several times.

The provincial administration has filed a lawsuit against the
company on charges of purposely delaying the divestment. The
South Jakarta District Court has sequestered KPC's assets at the
request of the province.

KPC noted that it would not sell its shares unless the
province revoked the litigation.

"KPC will make its 2001 share offer subject to the removal of
the litigation and the signing of the formal agreement with the
government of Indonesia," the company said.