Govt, KPC make ?progress? in latest talk over divestment issue

Another round of negotiation on the divestment obligation of coal mining giant PT Kaltim Prima Coal (KPC) had taken place Friday. While no conclusion was reached on the difficult divestment price issue, there are several things that can be considered as 'progress', according to a source.

Participants of the meeting included officials of the directorate general of geology and mineral resources and KPC shareholders, who were represented by Lex Graefe and Peter Vider.

KPC is equally owned by Rio Tinto and BP.

A source told Petromindo.com Friday that the meeting agreed to extend the deadline of the divestment obligation from 30 September 2001 to March 31, 2002.

The meeting also agreed to set aside a certain amount of fund to be allocated for East Kalimantan administration should the September 30 deadline could not be met. The amount of the fund would be decided later.

KPC is obliged to divest up to 51 percent stake to the East Kalimantan administration. The negotiation for the divestment has been going on for around two years, causing some frustration among East Kalimantan government officials and legislators. The most difficult issue is now in deciding the price for the 51 percent stake.

Some East Kalimantan officials had earlier indicated of a possible extension in the divestment deadline, but they wanted KPC to set aside a certain amount of dividend for the administration as a compensation for the delay.(Alex)