PT BA boss suspects "many politics" in KPC divestment

Ismet Harmaini, The president director of the South Sumatra-based state owned coal mining PT Tambang Batubara Bukit Asam (PT BA) has accused some bidders of the 51 percent stake of the East Kalimantan-based PT Kaltim Prima Coal of being engaged in "money politics" in order to win their bidding, Media Indonesia reported on Monday.

"The KPC?s shares have lured many investors. Some of them have even spent up to US$5 million to enable them to win the bidding process," he said in a meeting with members of the South Sumatra Legislative Council. He, however, did not unveil which investors that had used "money politics".

PT BA, which operates coal mining in Tanjung Enim, South Sumatra, is one of local companies that have expressed interest to buy part of the 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.

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 Ministry and Energy and Mineral Resources and existing shareholders for allegedly barring it from bidding the 51 percent share.

PT BA initially said that it planned to buy 12 percent of the KPC shares but during the meeting with the legislators Ismet said that the company would instead bid for the whole 51 percent shares that would be divested by KPC shareholders.

According to Ismet, buying KPC shares would significantly improve the future performance of the South Sumatra-based coal producer.(*)