Bapepam says sale of Lapindo not appropriate

The capital market supervisory agency (Bapepam) said that the move by publicly listed oil and gas company PT Energi Mega Persada (EMP) to divest unit operating gas that has spewed mud for the past seven months is not "appropriate".

?EMP needs to find an independent appraiser who objectively says who's responsible'' before selling the unit, Bapepam's chairman Fuad Rahmany said.

The gas well in Sidoarajo, East Java is operated by EMP's subsidiary Lapindo Brantas Indonesia (LBI), which 50 percent stake. The other shareholders are Medco Energi International (38 percent) and Australia's Santos Ltd. (12 percent)

The gas well has been spewing mudflow for seven months, forcing tens of thousands of poeple to evacuate and caused damage to roads, industries around the well.

EMP sold its stake in LBI to Freehold Group Limited for US$1 million.

EMP said that the asset sale was signed on November 14, 2006. As the transaction neither involved any conflict of interest nor was it material, EMP said it has no obligation to ask for shareholders' approval for the transaction

The decision to sell LBI to Freehold Group Ltd. instead of Lyte Ltd, a subsidiary of Bakrie Group, came after EMP failed to secure approval from the Capital Market Supervisory Agency (Bapepam). EMP is controlled by Bakrie Group(*)