Price deal over KPC share may be annulled

The recent agreement on the share price of East Kalimantan-based coal mining giant PT Kaltim Prima Coal (KPC) will have to be cancelled if the company?s divestment program fails to be completed by the end-March deadline, according to an official at the ministry of energy and mineral resources.

Head of the ministry?s legal bureau T.A. Nurwinakun said that the divestment program is now under threat because the East Kalimantan government has not dropped its lawsuit against KPC and its shareholders.

The central government and KPC recently agreed to value 100 percent shares of KPC at US$822 million. The East Kalimantan provincial administration, which has been named by Jakarta as the preferred bidder of KPC shares, was also happy with the price.

KPC is obliged to divest up to 51 percent stake to the government or local investors. The divestment program has been delayed for several times due partly to disagreement of the share price.

But KPC has said that it would only start the divestment process if the East Kalimantan government drops its legal charges against the company and its shareholders.

East Kalimantan filed the legal suit in October due to delays in the divestment process.

Nurwinakun said that the Court had issued a sequestration rule on Rio Tinto and BP?s assets for the second time last Thursday, putting a serious threat to the KPC divestment program.

The East Kalimantan administration had recently agreed to drop the lawsuit, following the share price deal, but it is not clear why until now it has not realized its promise.

The East Kalimantan lawyer team, led by Didi Dermawan, failed to show up at a scheduled meeting last Thursday with the lawyer team of KPC, led by Todung Mulya Lubis. The meeting was supposed to discuss plans to drop the legal charges.(Godang)