Negotiations on KPC divestment to be concluded soon: Purnomo

Negotiations between the Indonesian government and coal mining giant PT Kaltim Prima Coal (KPC) on the latter?s obligation to divest 51 percent of its shares will be soon concluded, according to a cabinet minister.

?I am certain the issue will be settled in the near future because the two parties have begun to reduce the level of their differences,? Minister of Energy and Mineral Resources Purnomo Yusgiantoro was quoted as saying this week by Suara Pembaruan daily.

Purnomo said government negotiators would meet with those from KPC this week.

The dispute over KPC?s obligation to divest 51 percent of its shares to the Indonesian government, state firms or Indonesian-owned companies began in 1999. The divestment did not happen because the two parties sharply differed on share price levels.

A source told Suara Pembaruan that the two parties had not yet reached any agreement on the share price. The price of coal is among the crucial elements debated in their negotiations, the source added.

Purnomo admitted differences on share prices occurred between the two parties, but he declined to comment on those figures.

He only said: ?There is bargaining in any negotiation, and we will do the same. Say, PT KPC will cut its prices and we will increase ours so that we will eventually meet in one point.?

Meanwhile, a source at BP, which is a shareholder of KPC, said KPC basically wants to divest 51 percent of its shares provided that the share price set by the Indonesian government is up to standard calculations.

?This kind of mechanism must be followed because we also shall have to give an account to our overseas shareholders,? the source said, adding that the negotiations between the government and KPC had reached their final stage.

The divestment of KPC shares must be completed on March 31, 2002. If it does not happen, KPC will open a new bid for its shares with share prices standing at last year?s level.

KPC is equally owned by Anglo-Australian mining giant Rio Tinto (50 percent) and Anglo-American energy giant BP PLC (50 percent).

KPC operates coalmines in Sangatta, East Kutai in East Kalimantan Province with last year?s production of 17 million tons of coal. (*)