NGOs urge province to be transparent on KPC purchase

The Jakarta Post, Jakarta

While the East Kalimantan provincial administration is pressuring giant coal company PT Kaltim Prima Coal (KPC) to sell it its majority shares, several non-governmental organizations (NGOs) have repeated calls for the province to be transparent about its financial backer.

The NGOs, grouped together as the Coalition of East Kalimantan NGOs, said some two years after the provincial administration had started pushing KPC to sell its shares, the East Kalimantan people were still in the dark about PT Intan Bumi Inti Pradana, which had reportedly promised financial backing for the province's bid to buy the shares.

"The public is entitled to clear and transparent information about the reasons why PT Intan has been selected by the provincial administration as a partner in acquiring KPC's shares," the NGOs said in a statement made available to The Jakarta Post.

The NGOs suspect the province's top leaders and council members have made a shady deal with PT Intan, which could harm the interests of East Kalimantan's people as stakeholders in the coal mining operation.

"There are rumors about backdoor and illegal deals on share distribution," the NGOs said.

The central government has also called on the province to tell the public about the owners of Intan and its deal with the company as part of good governance, but the province has thus far ignored the calls.

Unconfirmed rumors say that Intan is owned by businessman David Lim, a nephew of tycoon Liem Sioe Liong.

KPC, which produces 15 million tons of coal each year at its coal mine in Sangatta, East Kutai regency, is equally owned by Anglo-Australian mining giant Rio Tinto and Anglo-American energy giant BP PLC.

Under the contract with the government, KPC has to sell up to 51 percent of its stake to the Indonesian government, state firms or Indonesian-owned companies after ten years of operation.

The East Kalimantan province has declared its intention to buy the shares but negotiations have stalled over the value of the shares.

KPC's shareholders value the 51 percent stake at US$453 million, while the province is only ready to buy the stake at $320 million.

The province has filed a suit against the coal company in the South Jakarta District Court for intentionally delaying its divestment obligation -- a move which is considered by analysts as another pressure on KPC to bow to the province's demands.

The NGOs called on the House of Representatives to send a team of legislators to investigate the owners of PT Intan and its deal with the province.