Govt won?t force KPC to realize divestment program: Official

A senior official of the ministry of energy and mineral resources said the government would not its authority to force coal mining company PT Kaltim Prima Coal (KPC) to realize its divestment program this year, East Kalimantan-daily Kaltim Post reported on Wednesday.

?There is no need to use such an authority. It will hurt investment climate,? director general of geology and mineral resources Wimpy S Tjetjep said Tuesday after the ceremony to deliver mining documents to all regents of East Kalimantan.

The visit to the province was part of Wimpy?s nationwide travel to submit mining documents to the regions following the implementation of the Autonomy Law No. 22/1999, which transfers the mining authority from the central government to the regional administration.

Wimpy added that the government could be accused of violating the contract if it used its authority to force KPC to realize its divestment program.

Wimpy noted however that he was optimistic that KPC?s divestment program could be completed by October this year.

Under the contract, KPC is obliged to sell 51 percent stake this year to Indonesian government, state companies, Indonesian-controlled private companies or citizens. The East Kalimantan provincial administration has voice interest to buy the stake.

Negotiations are now in progress between the ministry, the provincial administration and KPC?s shareholders-Anglo Australian mining giant Rio into and Anglo American energy firm BP Plc on the price of the 51 percent stake.

KPC?s shareholders have valued the 100 percent stake in KPC at US$880 million, but the provincial administration and the ministry set lower prices.

When asked for comments on the price proposed by KPC, Wimpy said it was unreasonable.

?If it is reasonable, we don?t need to negotiate any longer,? Wimpy said. (*)