E. Kutai regency forms new firm to control KPC's shares

East Kutai, one of the regencies in East Kalimantan, has formed a new company, Kutai Timur, to control its 18.6 percent interest in major coal producer Kaltim Prima Coal, Bisnis Indonesia reported on Thursday.

The newspaper's source said that the new company would replace Perusahaan Pertambangan and Energi Kutai Timur (PPEKT), a company established by East Kutai's previous regent to buy the 18,6 percent from Bumi Resources.

According to the source, the new company was formed because the establishment of PPEKT was not supported by a proper legislation.

The East Kutai government bought the 18.6 percent share from Bumi Resources in 2003, just a month after the latter took over the entire stake of KPC from Rio Tinto and BP.

Rio Tinto and BP were required to divest up to 51 percent of its stake in the coal producer two years ago as part of the mandatory divestment requirement stated in the company's contract of work. Prior to the acquisition of KPC by Bumi Resources, the government had allocated 31 percent shares to both East Kalimantan provincial administration and East Kutai regency administration, and another 20 percent to state owned coal producer PT Tambang Batubara Bukit Asam.

After the acquisition, Bumi Resources promised to continue the divestment process. (*)