PLN also bids for KPC?s 51% stake

State owned electricity company PLN has surprisingly joined the competition to bid for 51 percent of East Kalimantan-based major coal producer PT Kaltim Prima Coal?s stake, Bisnis Indonesia reported on Thursday.

"PLN has formally filed its application to bid for KPC?s 51 percent stake," Ruston Situmorang, the legal consultant of Minister of Energy and Mineral Resource. In addition, PLN, PT Batubara Bukit Asam and PT Timah Tbk had also expressed their interest to join the bidding.

Ruston said that the electricity company considered the takeover of the majority stake in the coal mining company as an important business strategy to secure a sustainable coal supply to meet the growing demand from its power plants, particularly its Suralaya power plant in West Java.

Although the existing bidders are all interested in acquiring the entire 51 percent stake which would be divested by KPC shareholders, they would only receive part of them. "The 51 percent stake will be given to several bidders," he added.

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.

However, the mandatory divestment program does not run as expected due to dispute with the East Kalimantan provincial administration, which recently filed a legal suit against the existing shareholders for allegedly barring it from bidding the 51 percent share

T.A. Nurwin, the spokesman of the Ministry of Energy and Mineral Resources, said in Jakarta said early this week that the limited Cabinet meeting would soon decide what actions to be taken to break the deadlock.

The inter-ministerial team, which handled the divestment plan, has given two options to be discussed by the Cabinet. One of the options is a recommendation to allow the government to acquire the 51 percent of KPC shares, and the other one is to give the government the authority to appoint the buyers.

Besides the East Kalimantan administration, several other local investors have also filed their bids to buy KPC?s 51 percent stake. They include PT Intam Bumi Inti Perkasa (IBIB), which is owned by David Liem, PT Borneo Batubara (owned by Reynaldo Thamrin), PT Bumi Resources (Bakrie Group). PT E Securities, and PT Nusantara (owned by Prabowo Subyanto). (*)