Divestment of KPC shares would be held through open tender

The government said that the divestment of shares in East Kalimantan-based coal mining company PT Kaltim Prima Coal (KPC) would be held through open tender, the Koran Tempo and the Investor Indonesia newspapers reported in their Saturday edition.

This new plan emerged after East Kalimantan provincial government and State owned coal miner PT Bukit Asam (PTBA), the initial would-be investors for the shares, refused to buy a stake in KPC, which is owned by the publicly-listed PT Bumi Resources Tbk.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Friday in Jakarta the government is determined to complete the divestment process of KPC.

“The government will stick to the provisions mentioned in the coal contract especially Article 26 and open tender for the sale,” Purnomo said.

Purnomo explained that, in fact, the government has prepared some alternative schemes for KPC’s divestment.

One of the alternatives was the government itself wanted to buy a stake in KPC but the ministry of finance didn’t allocate funds for this purchase.

“Because, we don’t have funds to buy a stake in KPC, we decided to sell it through tender process, Purnomo said.

In line with the coal contract, the national companies including state-owned and private companies will be given priority, Purnomo said.

The Cabinet decided in 2002 that KPC must sell its 51 percent of shares with a formula of 31 percent for East Kalimantan and 20 percent to PT Bukit Asam. But KPC sold 18.6 percent shares to East Kutai regency prompting East Kalimantan and PT Bukit Asam to refuse to buy the remaining stake.

KPC and East Kutai have signed a sales and purchase agreement on the transaction, although it has yet to be executed as the latter have not obtained the necessary funds. Purnomo said that the government has approved the sale as part of the contractual divestment obligation.(*)