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.