East Kalimantan legislators brief local leaders on KPC divestment

The Legislative Council of East Kalimantan province will meet leaders of the government?s institutions including the provincial administration, military and police to brief them about the council?s recent move related to the divestment of PT Kaltim Prima Coal?s 51 percent.

"The local leaders should be informed about the background of the decision that had been made related to KPC divestment," Khairul Fuad, the deputy chairman of the council said as reported by Kaltim Post on Wednesday.

The council issued last week a decree requiring KPC to stop its operation as protest against Minister of Energy and Mineral Resources Purnomo Yusgiantoro?s rejection to meet the local government?s demand to buy the entire 51 percent stake that would be divested by KPC.

Although the briefing would be bit too late, it was still important to prevent misunderstanding among the leaders in the province. "The council was forced to make such a decision because the central government did no longer supported the people in the KPC divestment plan," Fuad said.

Secretary General of Energy and Mineral Resources Djoko Darmono said recently that the option given to East Kalimantan provincial administration to buy only 31 percent of the 51 percent shares to be divested by PT Kaltim Prima Coal was final.

The ministry insists that as East Kalimantan is still part of the Indonesian Republic, it should abide by the central government?s policy. But the provincial administration says that the central government?s rejection to allow East Kalimantan to buy KPC?s 51 percent stake is irrational.

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

The divestment has been delayed for several times. The latest deadline for the divestment was initially set at June 31 but the legal suit filed by the provincial administration against the company?s shareholders has caused a delay in the divestment process.

The local government sued the company?s shareholders and the Ministry of Energy and Mineral Resources for prohibiting it from buying the 51 percent of KPC shares that would be divested. The court, on the request of the provincial administration, seized KPC?s shares posing another problem in the divestment program.

The provincial administration of East Kalimantan said late last month that it had dropped the legal suit against KPC to pave the way from the resumption of the delayed bidding process. But KPC management said that it had first consult with the Ministry of Energy and Mineral Resources before reopening the tender. (*)