KPC shareholders deny agreeing to 51% divestment

KPC shareholders deny agreeing to 51% divestment

JAKARTA (JP): Shareholders of coal mining company PT Kaltim
Prima Coal (KPC) in East Kalimantan said on Monday that they were
still in disagreement with the government over the percentage of
shares they must divest to local investors this year.

KPC shareholders Anglo-Australian mining company Rio Tinto and
British-American oil and gas company Beyond Petroleum (BP)
argued they must only divest 44 percent instead of 51 percent of
their stake in KPC, according to a KPC executive representing the
two shareholders.

KPC director Lex Graeffe disputed the article on Saturday by
The Jakarta Post, which quoted a senior government official as
saying that during a meeting last week, KPC's shareholders and
the government had agreed on a 51 percent divestment.

"We discussed a number of things, but we have not yet agreed,"
Graeffe told the Post.

Secretary-general of the Ministry of Energy and Mineral
Resources Djoko Darmono said on Friday that KPC shareholders had
agreed to divest 51 percent of their shares.

Rio Tinto and BP each own a 50 percent stake in KPC.

Under its coal agreement, KPC must offer up to 51 percent of
its stake to local investors in stages, starting between the
fifth and 10th year of commercial production which began in 1992.

Offering of shares should have begun in 1996, but according to
Graeffe, KPC had secured a deal with the government to delay the
divestment process by two years.

He cited that restructuring within the Ministry of Energy and
Mineral Resources prompted KPC to appeal for a delay, until it
was clear with whom the company must deal during the divestment
process.

In 1996 and 1997, KPC made three appeals for a total of two
years, that was approved by the then director general of general
mining, he said.

But he said the government now insisted that the director
general had no authority to sign the deal at that time.

This contradicts the government's stance in 1999, when it
agreed for a divestment portion of only 30 percent.

KPC, Graeffe said, would seek clarification on that issue.

He also refuted the official's statement that the government
would hand over the appraisal of KPC's shares value to the
company and its bidders.

KPC's coal agreement, he said, required the company and the
government to negotiate the value of KPC shares.

Should negotiations fail, he went on, both parties would each
appoint an independent valuer to determine the share prices.

If still no decision was taken, the government and
shareholders must jointly appoint a third valuer, he said.

"That valuer reviews the work of the other valuers and comes
to a conclusion about who is correct," he said, adding:" No
appeal, no renegotiation, that is the end of the process."

He said any future buyer of KPC's shares must accept the
price, and pay in cash within three months of the purchase
agreement.

As yet, KPC's only bidder is the East Kalimantan local
administration.

The coal mining company has an annual production capacity of
15 million tons, however, a series of strikes has cut its
output.(bkm)