KPC?s fate will be decided today

The fate of the East Kalimantan-based coal producer PT Kaltim Prima Coal will be decided during a limited cabinet meeting which will be held today, Koran Tempo reported on Friday.

The meeting which will be led by Coordinating Minister of Economy Dorodjatun Kuntjoro-Jakti would among others discuss a number of ?violations? that have been made by the management.

The daily said that the two hot topics -- the allegation that the new management had signed a forward sale agreement and the company?s alleged refusal to sell part of its shares to local companies ? would be discussed in the cabinet meeting.

KPC management has been accused of selling the company?s future production under a forward sale contract without the consent of the government. The company was also accused of refusing the offer of local companies to take over the company?s 51 percent share.

Under the existing contract, KPC shareholders should divest 51 percent of its shares to local investors as part of the mandatory divestment program. The divestment that should be been completed two years ago has been delayed for several times. Among the problems in the divestment plan is the refusal of KPC management to sell the shares to nominees appointed by the government.

The main shareholders Rio Tinto and BP which holds 50 percent stake each in KPC later announced that the two had reached an agreement to sell their entire stake to local company PT Bumi Resources. The move has angered the government not only because it was made when the mandatory divestment was still under negotiation but also because the deal was made without its approval. (*)