Government, KPC blamed for delays in divestment

The provincial government of East Kalimantan has accused the Ministry of Energy and Mineral Resources, and the management of Kaltim Prima Coal (KPC) as the culprits for the delay in the company's mandatory divestment, Bisnis Indonesia reported on Tuesday.

Syaiful Teteng, the secretary of the East Kalimantan provincial administration, said that the ministry and the former shareholders of the coal producer, BP and Rio Tinto had intentionally hampered the process of the divestment of the company's 51 percent shares to national companies for its own interest.

"Efforts made by Rio Tinto and BP to hamper the divestment programs always won the ministry's endorsement," he was quoted as saying by the daily.

The East Kalimantan government recently filed a legal suit against the East Kutai regency for buying KPC’s 18.6 percent shares without the consent of the provincial administration. At the same time, it also sues the ministry of energy and mineral resources, as well as Rio Tinto and BP for hampering the process of the divestment.

KPC is required to sell 51 percent of its shares to national companies as part of its mandatory divestment program. Under the government's decision made in 2002, 20 percent of the shares must be sold to state owned coal company PT Bukit Asam and the other 31 percent to East Kalimantan administration-owned companies.

KPC's new shareholder, Bumi Resources, which took over KPC in 2003, sold 18.6 percent of the company's shares to East Kutai regency's authority. The transaction was against the earlier agreement. (*)