Govt lobbying KPC to delay share divestment: Official

The government is continuing lobbying East Kalimantan-based coal miner PT Kaltim Prima Coal (KPC) to postpone the divestment of 51 percent of its shares which had been planned for June 30, director general of the Ministry of Energy and Mineral Resources Djoko Dharmono said on Thursday.

Djoko said there were no signs that the East Kalimantan provincial administration would drop its legal suit before June 30 against KPC shareholders Rio Tinto and BP Plc, a move required for KPC share divestment.

East Kalimantan last year sued KPC shareholders for US$776 million in the South Jakarta district court for their delay to sell 51 percent of its shares to the province. As a result, the court seized KPC shareholders? assets.

Rio Tinto and BP Plc insist that they will sell KPC shares to Indonesian investors only if its legal battle with East Kalimantan has been resolved.

?So we have to solve this legal problem first,? Djoko told reporters after attending a closed door meeting with a House sub-commission on energy.

Meanwhile, the chairman of the House energy sub-commission Priyo Budisantoso said on Thursday KPC will likely agree to delay the divestment of its shares for one or two weeks.

Priyo said however the government should beware of Rio Tinto purchasing a portion of the 51 percent shares through certain private investors.

?If this happens it should be expelled,? Priyo told reporters, saying that they were not so suspicious of BP Plc doing such things.

In another development, KPC and its shareholders said in a press statement on Thursday the company had this week agreed with the government on a number of major principles, and that formal documentation was being prepared to record final agreement.

The statement said: ?PT Kaltim Prima Coal and its owners Rio Tinto and BP have made progress in their discussions with the Indonesian government regarding the 2001 offer of KPC shares under the Coal Agreement.?

KPC operates a huge coalmine in Sangatta in East Kutai regency, East Kalimantan. Rio Tinto and BP equally own the firm.

The company is required under its contract to divest 51 percent of its shares to Indonesian parties after 10 years commercial operation. Its started commercial operation in 1992.

The government decided recently that the 51 percent shares of KPC be sold to sate three buyer groups namely state enterprises, East Kalimantan Province and Indonesian private investors.

Several state enterprises and private investors had expressed interest to buy the shares, while the East Kalimantan administration still insists that it become the preferred bidder for the shares. (godang/leo)