KPC, East Kalimantan agree on divestment plan

The East Kalimantan provincial administration had reached an agreement with coal mining company PT Kaltim Prima Coal (KPC) on the number of shares to be divested by the coal company, a senior official of the Ministry of Mines and Energy said on Thursday.

Director general of mining Surna T. Djajadiningrat said KPC and East Kalimantan agreed that the coal company had to sell 44 percent of its shares this year.

Under its contract of work, KPC, which operates a huge coal mine in the Sangatta area in the province, has to sell up to 51 percent of its shares to either the government, state companies, Indonesian companies or Indonesian citizens from the fifth year to the tenth year of operation.

The East Kalimantan provincial administration, which is interested in buying the company's shares, earlier said the company had to divest 51 percent of its shares this year, arguing that the company had been operating for ten years since November 1990.

KPC however insisted that it had to divest only 37 percent shares this year, citing that there had been an addendum to the contract, stipulating that the company started operation in 1992.

Earlier, KPC insisted that under its contract of work, it had to sell only 37 percent this year, but the East Kalimantan said the coal company had to sell 51 percent of its shares.

Surna said the government welcome East Kalimantan's intention to buy the shares, but noted that the provincial administration was not allowed to use foreign capital to buy the shares.

There have been rumors that the provincial administration will get financial supports from international financier George Soros' investment firm PT Bhakti Investama, but the provincial administration had denied the rumors. (*)