Governor blasts KPC?s acquisition by Bakrie

The East Kalimantan provincial administration, which has been for years seeking to gain control of coal mining company PT Kaltim Prima Coal (KPC), voiced on Monday anger over the decision by the coal firm?s shareholders to sell all their shares to PT Bumi Resources.

East Kalimantan?s governor Suwarna AF, who spearheaded the years-long campaign to pressure KPC?s shareholders to sell their shares to the local administrations, threatened to withhold administrative service from KPC.

He also called on the provincial council to take KPC management hostage.

?We shall not give KPC administrative service. If necessary, the provincial council can take them (KPC?s management) hostage. The council has the right to do so,? Suwarna was quoted by local daily Kaltim Post as saying Monday evening during a press conference especially arranged to respond the report about KPC?s acquisition.

Anglo-American energy firm BP PLC and Anglo-Australian mining giant Rio Tinto, which equally owns KPC until after the acquistion, announced on Monday that they had sold all their shares to Bumi Resources, an affiliate of Indonesian business group Bakrie Group, for US$500 million. Listed on the Jakarta and Surabaya Stock Exchanges, Bumi has business interest in mining, oil and tourism.

Suwarna said he was very disappointed by KPC?s shareholders and some Cabinet members, who he said had colluded to block the province?s efforts to buy shares in the coal firm.

He said President Megawati Soekarnoputri and Minister of State Enterprises Laksamana Sukardi gave supports to the province?s efforts, but Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti and Minister of Energy and Mineral Resources Purnomo Yusgiantoro showed no ?sympathy? to the province.

He said the President had made a decision to allow state owned mining firm PT Bukit Asam and East Kalimantan to buy 20 percent and 31 percent of KPC respectively. Under the contract, KPC is obliged to divest up to 51 percent of its shares to either the government, state owned enterprises and Indonesian-controlled private firms or Indonesian citizens.

Suwarna said the province has planned to give 60 percent of the East Kalimantan portion to the East Kutai regency administration as the host of KPC and the remaining 40 percent to other regencies in the province.

However, he said, while allowing Bukit Asam to conduct due diligence on the coal firm, KPC?s shareholders had denied permission for the provincial administration-owned firm to do the same thing.

Suwarna was also surprised at the price paid by Bumi Resources for the acquisition of KPC stake.

?Based on the audit report, the firm is valued at $822 million. The provincial administration is ready to pay $419 million for a 51 percent stake. What is unbelievable is that Bakrie paid $500 million for a 100 percent stake,? Suwarna said. (*)