Bumi Resources criticized over KPC divestment plan

PT Bumi Resources has received strong criticim for lack of transparency on how it intends to carry out the mandatory divestment of 32.4 percent shares in East Kalimantan-based coal mining company PT Kaltim Prima Coal (KPC), Koran Tempo reported on Monday.

Tjatur Sapto Edy, a member of the House of Representatives (DPR) said in Jakarta on Saturday that the sale of KPC's 32.4 percent stake should be carried out through an open bidding process so that all companies had a fair chance to purchase the shares.

He said that the appointment of PT Strade Nusalgobus by Bumi Resources as the buyer of the KPC stake was not transparent because it was not carried out through an open bidding process. "The auction should be carried transparently," he added.

Earlier report said that Bumi Resources, the majority shareholder of KPC would sell its 32.4 shares in the coal mining company to a relatively unknown local company PT Strade Nusaglobus as part of the company's mandatory divestment program.

Sources told the daily that the agreement to sell the shares to PT Strade had been signed on March 31 in which the company agreed to buy the 32.4 percent in KPC for US$ 400 million.

According the regulation, the shares that should be sold under the divestment program should be first offered to the government. If the government refuses to buy the shares, an open bidding should be carried out to find the buyers.

Minister of Finance Jusf Anwar had made it clear that the government did have money to buy the KPC shares and asked private companies to take the opportunity to buy KPC's 32.4 percent shares.

Meanwhile, Director General of Geology and Mineral Resources Simon Sembiring said that the government would not interfere in the KPC's share divestment process. "It is a pure business deal," he added.

He said that his office would only assess whether or not the transaction was carried out through the existing procedures. The buyer, for example, should first carry out a due diligence audit, and that the purchase should be based on the price agreed by the government and Bumi Resources, he added.

Bumi Resources had already sold 18.6 percent of the company's shares to East Kutai regency's authority immediately after it took over the mining company two years ago from BP and Rio Tinto two years ago. It means that it needs to sell another 32.45 percent of the KPC shares to fulfill the mandatory divestment requirement.

Under the divestment program, Bumi Resources should divest up to 51 percent of KPC shares to local companies. (*)