KPC share divestment to occur as planned: Official

The government is optimistic that the East Kalimantan provincial administration will drop its legal suit against Rio Tinto and BP Plc, paving the way for smooth divestment of the 51 percent shares of East Kalimantan-based coal miner PT Kaltim Prima Coal (KPC), a government official told Petromindo.com. on Wednesday.

?There will not be deadlock. Discussions of the interministerial team is leading to win-win solution, and I am sure they will drop their legal suit. All matters related to the divestment plan will be settled soon,? said TA Winarkun, spokesman of the Ministry of Energy and Mineral Resources.

Ministry of Energy and Mineral Resources Secretary General Djoko Dharmono said recently the bidding of the KPC shares would be opened during the period between July 1 and September 30.

East Kalimantan last year filed a suit in the Central Jakarta district court against KPC shareholders Rio Tinto and BP Plc for US$776 million in compensation for their delay to divest 51 percent of KPC shares to the province which claims to be the preferred bidder. Rio Tinto and BP Plc insisted that the share divestment could be done only if East Kalimantan had dropped its suit.

Meanwhile, sources told Petromindo.Com the central government is trying to press Rio Tinto and BP Plc to give it preferential rights to sell the KPC shares to state enterprises, Indonesian private investors and East Kalimantan.

In another development, East Kalimantan governor Suwarna AS denied this week?s reports that East Kalimantan and the central government had reached ?win-win? solution to their dispute over the KPC share divestment. The province still insists that it become the preferred bidder for the 51 percent shares.

KPC is required under its contract to divest 51 percent of its shares to Indonesian partners after 10 years commercial operation. The company started commercial operation in 1992.

KPC operates a huge coalmine in Sangatta in East Kutai Regency, East Kalimantan. (Godang).