KPC divestment will be discussed in Cabinet meeting
Tuesday, April 16 2002 - 03:27 AM WIB
T.A. Nurwin, the spokesman of the Ministry of Energy and Mineral Resources, said in Jakarta on Monday that the inter-ministerial team which currently handled the divestment problem had recommended two options to be discussed in the Cabinet meeting.
"I could not yet unveil what options, which had been recommended to the Cabinet meeting," he was quoted as saying by the newspaper. However, Minister of Energy and Mineral Resources said earlier that the two options include a recommendation to allow the government to acquire the 51 percent of KPC shares, and to give the government the authority to appoint the buyers.
"We have in fact proposed the Cabinet to take one of the recommendations. But the final decision will be made by the Cabinet," he added.
KPC, which operates a large coal mining area in East Kalimantan, is equally owned by world mining giants Rio Tinto and BP. Under its contracts of works, the company?s shareholders are required to divest 51 percent of their shares to local investors.
However, the mandatory divestment program does not run as expected due to dispute with the East Kalimantan provincial administration, which recently filed a legal suit against the existing shareholders for allegedly barring it from bidding the 51 percent share.
The local government said that the existing shareholders had placed a high price on the company?s shares in order to prevent it from buying the shares.
KPC shareholders and the central government, through the Ministry of Energy and Mineral Resources then agreed to lower the price of the 51 percent stake to US$419.22 million. But the local government still refused to drop its legal suit, causing a further stalemate in the divestment program.
Besides the East Kalimantan administration, several other local investors have also filed their bids to buy KPC?s 51 percent stake. They include PT Intam Bumi Inti Perkasa (IBIB), which is owned by David Liem, PT Borneo Batubara (owned by Reynaldo Thamrin), PT Bumi Resources (Bakrie Group). PT E Securities, and PT Nusantara (owned by Prabowo Subyanto).
PT Nusantara Energi had committed to give a 15 percent of the 51 percent shares it would be acquired to the local community if it were named to take over the 51 percent stake. In addition, the company also promised to provide US$5 million for the community development.
The commitment was made during a meeting between bidders and the East Kutai regency on Monday.
Another bidder PT Borneo also promised to allocate 12 percent of the 51 percent to the local community, and another US$5 million for community development. PT Bumi Resources did not make any commitment during the meeting, while PT E Securities said that it would buy the 51 percent in cooperation with the local government and several private companies.(*)