East Kalimantan demands a 51 percent stake in KPC

East Kalimantan demands coal mining giant PT Kaltim Prima Coal (KPC) to divest up to 51 percent of its stake this year to the local administration.

Local legislator Agus Tantomo Mbus was quoted as saying by the local Kaltim Post daily that according to the mining contract of work signed by the company in 1982, KPC must divest 51 percent of its stake this year.

Speaking in a special meeting between the parliament and the East Kalimantan administration over plans to acquire KPC, Agus also said that the local government must have a majority stake in KPC to have a control and to fully benefit from the company's operation.

The statement contradicts earlier reports and statements from the central government in Jakarta that KPC is only required to divest up to 37 percent of its stake this year.

Agus admitted that there had been misinterpretation of the KPC 1982 mining contract of work with regard to the divestment obligation.

He said that during a recent meeting between the local parliament and KPC management, the company interpreted the contract that it's oblige to start making divestment in 1996. "With this interpretation, the divestment of KPC this year would only total 44 percent."

But Agus said that the local parliament interpreted the contract in a different way, in which KPC must have started making divestment since 1994, which means that the company should have divest 51 percent of its stake this year.

The East Kalimantan administration had said that it's interested to purchase the KPC shares.

But the Monday meeting didn't decide how the administration would proceed with its plans.

The administration had earlier stated that it had signed an MOU with a Jakarta-based private investor called PT Intan to finance the acquisition plans. (*)