Australian Ambassador meets East Kalimantan leaders over KPC issue
Tuesday, May 22 2001 - 06:30 AM WIB
The Ambassador of Australia to Indonesia Richard Smith visited East Kalimantan on Monday to introduce himself to the local leaders including Governor Suwarna AF and key people at the provincial Council, the local Kaltim Post daily reported.
But the paper said that Smith also talked about the divestment program of the giant coal mining company Kaltim Prima Coal (KPC) both during his meeting with Suwarna and the Council special team on KPC.
The paper said that Suwarna criticized KPC for delaying its obligation to divest 51 percent stake to the local administration. He said that the divestment program should have been completed last month according to the central government ruling.
But Smith said that KPC had been worried that the divestment program would end up in other party controlling a majority stake in the company. Smith said that KPC wanted a fair price for its 51 percent stake in a bid to repay some US$150 million debt and that the buyers of the stake must be multi parties not a single buyer.
KPC is equally owned by Rio Tinto and BP. The company has massive coal mining operation in East Kalimantan. According to its contract with the government, the company must divest up to 51 percent of its stake to local investor. The local East Kalimantan administration gets the first priority to purchase the stake, and it has appointed Jakarta-based investor called PT Inti to finance the acquisition.
Separately, in a meeting with the local councilors, Smith confirmed that KPC had appointed Salomon Smith Barney to appraise the value of its 51 percent stake.
Kaltim Post said that the councilors were surprised to learn this fact, pointing out that the introduction of a new investment bank would further delay the divestment program.
The Council special team on KPC is currently making investigation over alleged manipulation of export data by the company. The move followed the province's deep disappointment over the company's maneuvering to continue to delay its obligation to divest 51 percent stake. There has also been calls to file a legal suit to KPC over the delay.(*)