East Kalimantan vows to avoid unlawful steps in dealing with KPC

The East Kalimantan administration and legislative council agreed Monday to avoid unlawful steps in the effort to acquire a 51 percent stake in the giant coal mining company PT Kaltim Prima Coal (KPC).

Lawmaker Khairul Fuad, who is a member of the legislative council?s special team assigned to monitor the KPC divestment program, said that KPC could file a legal suit if the province took unlawful step.

He was quoted by the local Kaltim Post daily as saying that this would only cause a further delay in the divestment program.

The paper said that Minister of Energy and Mineral Resources Purnomo Yusgiantoro made the warning during a meeting Monday with the provincial administration and member of the special team.

Several members of the council?s special team had earlier threatened to ask the provincial administration to shut down the operation of KPC in East Kalimantan if the company?s shareholders continued to delay the divestment obligation.

KPC, which is equally owned by Rio Tinto and BP, is obliged to divest up to 51 percent stake to the East Kalimantan administration. The East Kalimantan administration and KPC have yet to reach agreement over the price of the share. KPC has insisted for a US$448 million for the 51 stake, while the province only offered some $319 million.

But Khairul said that the East Kalimantan side proposed at the Monday meeting a price of $257 million for a 44 percent stake in KPC. He said that the price level had been agreed by KPC during a meeting on October 26, 2000.

He said that the price for the remaining 7 percent stake would be further negotiated.(*)