Govt should be authorized to name buyers of KPC shares

Inter-ministry team has formally asked PT Kaltim Prima Coal to authorize the government in determining buyers of the company?s 51 percent shares which have to be sold to local investors as part of the mandatory divestment program, Bisnis Indonesia reported on Tuesday.

Ruston Situmorang, the legal consultant of the Ministry of Energy and Mineral Resources, said in Jakarta on Tuesday that the team had tried to ensure the KPC management that the involvement of the government in the sale of the company?s 51 percent stake would serve as the best possible way in solving the problem related to the mandatory divestment program.

"KPC, however, still doubts such an approach because the company is not sure the government will do the job fairly,? he was quoted as saying.

Under such an option, the government would decide which bidders, which are qualified to take part in the purchase of the 51 percent stake. The government then determines the number of shares that would be allocated to each bidder so that none of bidders would be able to hold majority ownership in the 51 percent stake available under the mandatory divestment program.

KPC, which operates a large coal mining area in East Kalimantan, is equally owned by world mining giants Rio Tinto and BP. Under its contracts of works, the company?s shareholders are required to divest 51 percent of their shares to local investors.

However, the mandatory divestment program does not run as expected due to dispute with the East Kalimantan provincial administration, which recently filed a legal suit against the existing shareholders for allegedly barring it from bidding the 51 percent share.

Bara Kaltim, one of a company owned by East Kalimantan provincial administration, will act on the behalf of the local government in taking over the coal mining company. Besides the company, several other investors have also filed their bids to buy KPC?s 51 percent stake. They include PT Intam Bumi Inti Perkasa (IBIB), which is owned by David Liem, PT Borneo Batubara (owned by Reynaldo Thamrin), PT Bumi Resources (Bakrie Group). PT E Securities, and PT Nusantara (owned by Prabowo Subyanto). (*)