KPC divestment awaits President?s decision

The government is preparing a number of options to settle the dispute related to the divestment of the 51 percent of PT Kalimantan Prima Coal (KPC). The problem has been also raised during the Cabinet meeting but the final decision will still need the approval of President Megawati Sukarnoputri, the spokesman for the Ministry of Energy and Mineral Resources, TA Nurwinakum, has said.

"Inter-governmental team is working out on a number of options to settle the dispute in the divestment of KC shares," he was quoted as saying by Bisnis Indonesia on Thursday. "The problem is no longer handled by the Ministry of Energy and Mineral Resources," he added.

The inter-governmental team has been assigned to settle the dispute because the divestment of the coal producer has a direct impact on bilateral relations, legal certainty, investment and security situation.

"As example, assets of the company which has been seized by the court are owned by the government. The assets have no relations with the divestment of KPC," he said.

The East Kalimantan government last year filed a legal suit against KPC for allegedly barring it from bidding the company. The local government said that the high price imposed by KPC is one of indications of the company?s efforts to prevent it from joining the bidding.

Last month, KPC, which is equally owned by Rio Tinto and BP, agreed to lower the price of KPC?s 51 percent share to $419.22 million but the provincial administration still refused to drop its legal suit. Under its contract of works, KPC is required to divest 51 percent of its shares to local investors. (*)