KPC management refuses to negotiate with E. Kalimantan bidders

East Kalimantan-based coal mine operator PT Kaltim Prima Coal (KPC) has opposed the appointment of the two East Kalimantan companies to buy part of the coal producers? 51 percent share and has also ruled out any kinds of negotiation with the two firms, which are owned by the provincial administration, Suara Karya reported on Thursday.

KPC?s president director Noke Kiroyan said in Jakarta on Wednesday that the appointment of the two companies was against with the standard procedures stated in the Working Contracts of Coal Mining Companies or PKP2B and the framework agreement between government and KPC.

"If there is no due diligence audit on the two companies, we will never give any response to the two firms? plan to bid 31 percent of KPC shares," Kiroyan said, adding that according to the existing standard procedures, any company intending to buy part of KPC shares should first pass the due diligence process conducted by the government?s appointed team.

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.

The mandatory divestment program has been delayed for at least three years due to a dispute over the percentage of the shares that must be sold to the central and local government. The local administration had demanded to buy all of the 51 percent stake.

According to the latest compromise, 31 percent of the 51 percent of KPC shares would be sold to the provincial administration and another 20 percent to the central government. The East Kalimantan administration has directly appointed two local companies, one owned by the provincial administration, another by owned the Kutai regency administration, to buy the 31 percent.

The central government offered the opportunities to buy the 20 percent of KPC shares to state owned coal mine operator PT Batubara Bukit Asam and state owned general mine operator PT Antam. After due diligence audit, the choice was given to PT Bukit Asam.

At the same time, the central government also approved the appointment of PT Melati Bhakti Satya which is owned by the East Kalimantan provincial administration and a mining company owned by the Kutai regency. The appointment was made without any due diligence audit.

State Minister for State Owned Enterprises Laksamana Sukardi defended the appointment of the two local companies, saying that the appointment of the two companies had followed the required procedures.

Kiroyan said that KPC management had sent a letter to asking for a clarification from the government. "But up to now, there has no clarification been made," he added. (*)