Long-waited divestment of KPC shares might be delayed again

The long-waited divestment of the East Kalimantan-based coal mine operator Kalimantan Prima Coal (KPC) might be further delayed until next year as the government has not yet named the companies which will buy the shares, Kompas reported on Tuesday.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said in Jakarta on Monday that uncertainties related to the buyers of the KPC?s 51 percent shares might cause a further delay in KPC?s divestment plan.

Purnomo said that State Minister for the Supervision of State Enterprises Laksama Sukardi seemed to have faced problems to name which state owned companies that would buy the 20 percent of the shares that had been allocated to the central government.

"On the other side, the provincial administration of East Kalimantan has also faced a problem in finding a partner in buying the other 31 percent share," he was quoted as saying.

The problem, according to the minister, might cause another delay in the divestment of KPC shares.

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 has 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 should find a business partner to buy the 31 percent, while the 20 percent which have been allocated to the central government would be auctioned to state companies.

State owned coal mine operator PT Batubara Bukit Asam and state owned general mine operator PT Antam have passed the qualification test to buy the shares but the State Minister for the Supervision of State Owned Enterprises has not decided which of the two companies that would be named to buy the shares.

Sources said that the two state-owned companies are not so excited with the purchase because they feel the price of the shares is still too expensive. The 51 percent share is worth US$419 million or US$8.2 per one percent share. (*)