KPC divestment plan to be finalized on Monday

The final decision on the divestment plan of the East Kalimantan coal mining giant PT Kaltim Prima Coal (KPC) is expected to be made on Monday with a "win-win" solution that would satisfied all parties, according to an official of BP Indonesia. KPC is equally owned by BP and Rio Tinto mining group.

"We don't want this case to go to the arbitration panel," said BP Indonesia vice president for public and government affairs Satya W. Yudha on Wednesday on the sidelines of a ceremony.

He declined to provide further comments.

Earlier, a senior official at the ministry of mineral resources and energy said that negotiation between KPC and government sides had been completed and the result was now in the hands of Minister of Mineral Resources and Energy Purnomo Yusgiantoro. The official said that the minister was expected to make the final decision soon.

KPC was supposed to divest 37 percent of its shares last year as stipulated according to its mining contract with the government. But the East Kalimantan administration, which has the first priority to purchase the shares, said that KPC must divest up to 51 percent according to the contract. Since then the two sides had been engaged in a dispute.

Recent reports quoted East Kaltim legislators as saying that the local administration would report KPC to the Attorney General's Office over alleged corruption for intentionally delaying the divestment requirement causing the government to suffer financial losses. The threat was made following reports that KPC was planning to bring the divestment dispute to the international court or arbitration to panel to be settled.

KPC is Indonesia's second largest coal producer with production of 14-million tons in 2000. (Godang S.)