KPC divestment deadline extended for another three months

The divestment deadline of the 51 percent shares of East Kalimantan-based coal producer Kaltim Prima Coal (KPC) has been delayed for another three months due to the refusal of East Kalimantan provincial administration to withdraw the legal suit against the company, a government official said Thursday.

T.A. Nurwinakum, the spokesman for the Ministry of Energy and Mineral Resources, said that the rescheduling of the company?s 51 percent shares had been approved both by the company and the ministry.

?Although there is an extension in the offering period, the price of the shares are not changed,? he was quoted by the daily as saying. ? Today, KPC will officially announce the delay in the divestment plan.

The ministry and KPC had initially set the deadline of the divestment plan on March 31, with a price tag of of US$822 million for the whole stake or US$419.22 million for the 51 percent stake. But the divestment cannot be carried out as the provincial government refused to withdraw its legal suit against the company.

?The legal suit should be pulled out, if not the divestment plan can not be carried out. If it happens, it will only inflict a loss to the Indonesian people,? Nurwinakum said.

As part of its contract of works, KPC is required to divest up to 51 percent of its stake to local investors either the government or national private companies. The divestment program should have been made last year but it has been delayed due to the high price set by KPC shareholders. The local government filed a legal suit against the company?s shareholders for allegedly barring it from buying the company?s 51 percent stake.

Separately, the secretary general of the ministry of energy and mineral resources Djoko Parnomo said that the legal action made by the East Kalimantan government was wrong. As the first priority to buy the company?s 51 percent stake is held by the central government, the central government, the legal suit filed by East Kalimantan against the company is legally defected, he said.

The local government is one of the bidders of the KPC shares but its plan to buy the company raised some concerns to the company?s shareholders due to its refusal to disclose the sources of the funds to finance the share acquisition. KPC shareholders fear that the local government will only act on the behalf of certain foreign investors in the bidding process. (godang)