East Kalimantan to report KPC to Police over delay in divestment program

The East Kalimantan administration is planning to report coal mining giant PT Kaltim Prima Coal to the National Police in Jakarta for intentionally delaying its divestment program obligation, according to a senior official of the administration.

The local Radar Kaltim daily quoted the assistant secretary of the East Kalimantan administration Syaiful Teteng as saying that there might have been collusion between KPC and certain officials at the ministry of mineral resources and energy to make the delay in the divestment program.

"There's indication that they (KPC) intentionally make the delay," Syaiful said.

He said that the administration had hired Jakarta-based lawyer Didi Darmawan to file the charges against KPC.

The government has demanded KPC to divest up to 51 percent of its shares immediately this year. The East Kalimantan administration has the top priority to purchase the shares. The divestment program was supposed to be already completed last year, but it has been delayed due to differences over the amount of shares to be released by KPC, which initially insisted that it was only obliged to divest up to 37 percent stake last year, and up to 44 percent this year according to the mining contract.

But recently, Minister of Mineral Resources and Energy Purnomo Yusgiantoro sent a letter demanding KPC to divest up to 51 percent stake, in line with the demand of the East Kalimantan administration.

But Radar Kaltim said that KPC has so far declined to implement the divestment obligation.

KPC, equally owned by Rio Tinto and Beyond Petroleum, controls a vast mining site in the East Kalimantan province.(*)