East Kalimantan says three firms are viable enough to join it to buy KPC shares

The East Kalimantan provincial administration sees at least three companies are feasible enough to join it in bidding the 51 percent of Kaltim Prima Coal?s shares, Bisnis Indonesia reported on Friday, quoting the secretary of the provincial administration office, Syaiful Teteng.

He said that the provincial administration and the Kutai regency authority had conducted due diligent audits on companies that were interested in teaming up with the province in bidding the 51 shares that would be divested by KPC.

From the due diligent audits, three companies were found to have met the requirements, he said, adding that interested parties which had shown their interests to team up with the provincial administration and the regency included state owned coal mining company PT Tambang Bukit Asam. But only three of them met the requirement including PT Intan Bumi Inti Perdana, PT Nusantara Energi and PT Centralink.

According to him, PT Intan could be more suitable as partner because unlike other companies, PT Intan is committed to providing funds amounting to US$7 million for community development, to build a public hospital, and education facilities.

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 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.

Last week, the provincial administration of East Kalimantan announced 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. (*)