PRESS RELEASE: Solution of problem related to divestment of PT Kaltim Prima Coal Shares

Considering that July 31, 2002 is the deadline for offering PT KPC shares, the Ministry of Energy and Mineral Resources deems it necessary to give some explanation to the public about following matters:

1. Among the requirements for divesting PT KPC shares is withdrawal of East Kalimantan provincial administration?s Civil Lawsuit against PT KPC and others in the South Jakarta District Court (Perkara Perdata Nomor 350/PDT.G/2001). There was information that the East Kalimantan provincial administration had on July 29, 2002 submitted a request to the South Jakarta district court to drop its civil lawsuit against PT KPC. The company is now awaiting decision of the South Jakarta District Court on the dropping of the Civil Lawsuit while making preparations for the divestment of its shares.

2. Aside from the civil lawsuit withdrawal, other requirements must also be fulfilled including:

a. The price of 51% of PT KPC shares is USD419,220,000

b. The Indonesian government must allocate 51% of KPC shares to more than one buyer (Indonesian Participant) and they must be independent buyers, and not an entity or group.

c. Due Diligence will be conducted on each Indonesian Participant which is intending to buy KPC shares, notably concerning their finance.

3. Taking into account the aspirations of the East Kalimantan people and the interest of the Indonesian people in general in the framework of the Unitary State of the Republic of Indonesia, and in accordance with PKP2B stipulations (Coal Agreement 1982) and the government?s financial capacity, the Government of the Republic of Indonesia has planned to allocate the greatest portion of 51% of KPC shares to East Kalimantan Provincial Administration and East Kutai Regency Administration, while the remaining balance will go to the Government of Indonesia.

4. In relation to the request to drop Civil Lawsuit filed by East Kalimantan Provincial Administration?s lawyers to the Panel of Civil Court Judges No. 350/Pdt.G/2001/PN JakSel at the South Jakarta District Court on July 29, 2002, and while awaiting the South Jakarta District Court to issue stipulation letter related to the request, the Government will take further steps among others:

a. Asking PT KPC to soon make preparations for offering 51% of its shares, which the company is obliged to divest in keeping with Article 26 PKB2B, to the Central Government no later than July 31, 2002.

b. Deciding further allocation of the 51% divestment shares, and for this the Central Government will coordinate with East Kalimantan Provincial Administration and East Kutai Regency Administration.

c. Undertaking due diligence on any party which intends to buy PT KPC shares.

d. Completing framework agreement between the Government and PT KPC on the offering of the 51% stake.

Jakarta, July 30, 2002, Public Relations Department, Ministry of Energy and Mineral Resources