Govt insists KPC has to divest 37% shares this year

The Ministry of Mines and Energy dismissed on Tuesday the East Kalimantan council and administration's claim

that coal company PT Kaltim Prima Coal has to divest 51 percent of its shares this year.

Director general of mining of the ministry Surna Tjahja Djajadiningrat told Petromindo.Com that KPC was obliged to sell only 37 percent shares this year.

"Last year, it was obliged to divest 30 percent shares. This year, its divestment obligation has increased to 37 percent shares," Surna said on the sidelines of hearing between three ministers and the House of Representatives' Commission VIII on mines and energy.

Surna made the statement following reports that the East Kalimantan council and administration had agreed to demand KPC sell 51 percent of its shares to the provincial administration so that the latter could have a majority stake in the company.

Under its contract of work, KPC, which operates a huge coal mine in the Sangatta area in the province, has to sell up to 51 percent of its shares to either the government, state companies, Indonesian companies or Indonesian citizesn from the fifth year to the tenth year of operation.

Surna said the East Kalimantan council and administration claimed that the company has been operating for ten years since November 1, 1990, referring to the contract of work awarded to KPC by the government in 1992.

The contract of work stipulates that the operation period of the company started six months after it completed the construction of its production facilities.

But, Surna said, the government used a reference the addendum of the contract agreed upon by KPC and its former principal i.e. state coal mining company PT Bukit Asam.

The addendum of the contract stipulated that KPC started operation in 1992, Surna said.

Bukit Asam used to become the principal of all coal mining contractors in the country, but the government transferred the principal rights to the Ministry of Mines and Energy in the middle of 1990s. (*)