East Kalimantan government seen to be not serious in buying KPC stake

The Ministry of Mines and Energy sees the East Kalimantan government to lack seriousness in buying the 37 percent shares of the giant coal mining company PT Kaltim Prima Coal (KPC) which must be divested this year.

Director general of mining Surna T. Djajadiningrat said on Monday that the ministry had frequently asked for the proposal of the East Kalimantan administration.

"The East Kalimantan administration has said that it's interested to buy, but until now they're not responding," Surna was quoted by the Bisnis Indonesia daily.

Surna said that based on the mining contract, the Indonesian government gets the first priority to purchase the divested KPC shares.

He said that the central government had then gave the priority to the East Kalimantan administration, which has said that it;'s interested but so far had not showed its "seriousness."

Surna said that there were around 11 investors willing to buy the KPC shares, and two of them had expressed a very strong interest.

He urged the East Kalimantan to immediately submit its purchase proposal.

Surna said that KPC was obliged to divest some 37 percent of its stake this year.

Meanwhile, the local East Kalimantan House of Representatives demanded KPC to give the local administration its 30 percent stake for free on grounds that the company had long exploited the natural resources of the province, and it was the central government not the provincial government which had benefited from KPC's operation.

Legislator Rusli said that there could be a "people power" to disrupt KPC's operation if the province failed to get what it wanted.

Rusli was speaking at a session between the local parliament and the management and owners of KPC including the top people from the Australian-based Rio Tinto mining group, and British Petroleum. (*)