Kaltim administration urges BP to expedite divestment of KPC

The East Kalimantan administration and legislative council have asked Anglo-American energy giant BP Plc as the 50 percent owner of coal mining firm PT Kaltim Prima Coal (KPC) -- to expedite the divestment of 51 percent stake at KPC this year, as mandated in its contract of works, Kompas daily reported on Monday.

The secretary of the council's special team for KPC divestment, Andi Harun, said that the current negotiations between the East Kalimantan administration and KPC shareholders were practically stalled because of large disparity over the price.

KPC shareholders, BP and Anglo-Australian mining giant Rio Tinto, wanted to sell the 51 percent stake at US$448.8 million, while the East Kalimantan administration bargained it at $319.08 million.

"Up until now, there is no agreement over the price. And KPC shareholders wanted to hire an independent valuation company (to determine the value of the 51 percent stake). This is allowed by the contract of works, but it may not solve the problem because they could still reject the results of the valuation," he said.

Andi Harun expressed his disappointment over the lack of commitment for divestment from KPC shareholders, especially BP, as proven from their being absent from a recent meeting hosted by caretaker minister of energy and mineral resources Purnomo Yusgiantoro.

At that meeting, all East Kalimantan representatives were present, including Governor Suwarna, and the chairman of the council's special team on KPC divestment, Agus Tamtomo. But none of KPC shareholders were present at the meeting.

"The meeting failed to discuss the divestment of KPC because BP representatives were absent. If negotiations continue to be postponed, it is very possible that the East Kalimantan administration will not get the wanted KPC stake this year because it needs to be discussed further next year," he said.

He urged Purnomo to intervene and force KPC shareholders to divest stake at a set price because KPC should have started the divestment since 1996, but it has not done so. (*)