Due diligence team for KPC share divestment to be formed next week

The government will next week form a team to conduct due diligence on investors which plan to buy a stake in East Kalimantan-based coal miner PT Kaltim Prima Coal (KPC), a source told Petromindo.Com on Thursday.

The team will include officials from the ministry of finance, the ministry of home affairs, the ministry of energy and mineral resources, the office of the coordinating minister for the economy, the East Kalimantan provincial administration and the East Kutai regency administration.

It might also include representatives of independent organizations, the source said.

KPC, Indonesia?s most profitable coal mining firm, late July formally offered to sell 51 percent of its shares to the central government. The government then allocated 31 percent of the shares to the East Kalimantan provincial administration, and retained the remaining 20 percent.

The East Kalimantan administration rejected the share allocation and still insists that it be given preferential rights to buy the entire 51 percent stake in KPC. It had planned to offer a portion of KPC shares to private companies. Meanwhile, government officials said it would allocate the 20-percent stake to state coal miner PT Batubara Bukit Asam.

KPC, equally owned by Rio Tinto and BP PLC, operates a huge coal mine in Sangatta in East Kutai regency, East Kalimantan.

KPC?s contract obliges it to divest 51 percent of shares after ten years of commercial operation. (godang)