Government okays Kutai's purchase of KPC shares

The government has formally approved of the purchase of 18.6 percent of the East Kalimantan-based coal producer PT Kaltim Prima Coal's (KPC's) shares by the East Kutai regency.

The head of the government's team for the divestment of KPC shares, Djoko Darmono said in Jakarta on Friday that the purchase of KPC's 18.8 percent had been made according to existing procedures.

"They have reported it to us and the deal now is valid," Djoko told reporters following a meeting with officials of the Kutai regency.

The regency of Kutai, where KPC operations are located, signed a deal last week on the purchase of the company's 18.6 percent shares from the new owner PT Bumi Resources. The regency bought the shares for US$104 million.

Bumi which also owns 80 percent interest in PT Arutmin, another coal producer based in Kalimantan took over the entire stake of KPC from Rio Tinto and BP for US$500 million. Bumi has promised that it will continue the divestment program that should have been made by the former shareholders.

According to the earlier agreement, KPC shareholders should sell 51 percent of its shares in the divestment program. For this purposes, the government has nominated East Kalimantan authority to buy 31 percent and state owned coal producer PT Batubara Bukit Asam the other 20 percent.

About 60 percent of the 31 percent of KPC shares (about 18.6 percent of the total shares) that should divested to East Kalimantan government has been allocated to East Kutai regency and the other 40 percent or about 12.4 percent to the East Kalimantan provincial administration.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said that state owned coal producer PT Batubara Bukit Asam (PT BA) still had a strong interest to buy the 20 percent stake in KPC. (godang)