East Kalimantan opposes plan to form KPC team

The provincial administration of East Kalimantan and the provincial legislative council have expressed opposition against the government?s plan to form an inter-governmental team to settle the problem related to the mandatory divestment of PT Kaltim Prima Coal (KPC).

The local government said that the team, which would be led by Minister of Energy and Mineral Resources, would not be effective. They doubted if the team would be able to settle the problem.

?It seems that the central government has no intention to support East Kalimantan provincial administration in acquiring KPC shares. The establishment of the team will not help East Kalimantan,? said Andi Harun, the former member of the province?s special team on KPC divestment program.

The secretary of the provincial administration H.S. Syafran said that the establishment of the team was not fair because the local government, which is directly responsible for the KPC operation, was not involved in the team.

The East Kalimantan government last year filed a legal suit against KPC for allegedly barring it from bidding the company. The local government said that the high price imposed by KPC is one of indications of the company?s efforts to prevent it from joining the bidding.

Sources said that the province?s plan to acquire the 51 percent of KPC shares received no support from the central government, which suspected that East Kalimantan would tie up with foreign investors in acquiring the KPC shares.

According its contract of works, the company is required to divest 51 percent of its shares to local partners after certain periods of its operation.

Last month, KPC, which is equally owned by Rio Tinto and BP, agreed to lower the value of KPC?s entire stock to US$822 million, or $419.22 million for the 51 percent stake of the company.(*)