"East Kalimantan does not force itself to buy 51 percent of KPC shares"

State Minister for State Enterprises Laksamana Sukardi has said that East Kalimantan administration had not forced itself to buy the entire 51 percent shares that would be divested by Kaltim Prima Coal (KPC).

"I just met East Kalimantan governor and I think East Kalimantan does not force that it should buy 51 percent of KPC shares," he was quoted as saying by Kompas daily during his brief visit in the provincial capital of East Kalimantan, Samarinda on Monday.

The minister met East Kalimantan Governor at the Gran Senyiur Hotel in Balikpapan before visiting Samarinda.

KPC, which operates a large coal mining area in East Kalimantan, is equally owned by world mining giants Rio Tinto and BP. Under its contracts of works, the company?s shareholders are required to divest 51 percent of their shares to local investors.

The mandatory divestment program has been delayed for at least three years due to a dispute over the percentage of the shares that must be sold to the central and local government. The local administration has demanded to buy the entire 51 percent stake.

According to the latest compromise, 31 percent of the 51 percent of KPC shares would be sold to the provincial administration and another 20 percent to the central government. But East Kalimantan is still not satisfied with the new arrangement.

Laksamana said that he understood if East Kalimantan demanded a majority stake in the major coal producer to enable it to control the company?s management. (*)