East Kalimantan vows to continue fight for KPC shares

East Kalimantan legislative council vows to continue fight to obtain a majority stake in the giant coal mining company PT Kaltim Prima Coal (KPC) as it would contribute significantly to the province?s coffer.

The local Kaltim Post daily reported Monday that KPC is scheduled to issue dividend to its shareholders sometime in the middle of this month, but East Kalimantan would get nothing as it had not been able to acquire KPC shares.

The paper said that out of the 13.5 percent coal royalty paid by the company via the central government, the region would only get around 3 percent.

Coordinator of the East Kalimantan legislative council?s special team on KPC divestment Khairul Fuad told the paper that the province must continue the fight for the KPC shares so that it could also enjoy the hefty dividends.

According to one estimate, KPC, which is equally owned by Rio Tinto and BP, distributes around US$120 million in dividend per year.

KPC is obliged to divest up to 51 percent stake to the East Kalimantan government. But the negotiation for the KPC shares have been going for over two years now causing some frustration among East Kalimantan officials as well as legislators. Until now the two sides had been able to reach agreement over the share price.

There has been suggestion recently that the divestment obligation be delayed, with a compensation that East Kalimantan would gent a certain amount of dividend.(*)