East Kalimantan rejects govt options on KPC divestment
Monday, October 8 2001 - 01:37 AM WIB
The local Metro Balipapan daily quoted provincial treasurer HS Sjafran and Speaker of the legislative council Sukardi Djarwoputro as saying that they would oppose the options because the administration would not be included in any price negotiation.
KPC, which is equally owned by Rio Tinto and BP, is obliged to divest a 51 percent stake to the East Kalimantan government. But both sides continued to be in disagreement over the price of the shares. Last week the government proposed three options to help end the stalemate so that by March 2002 the divestment program could be completed.
Under the government options, there is a possibility of further price negotiation of the KPC shares but this time it would only involve the central government and KPC.
The three options offered by the government are as follows.
First, divesting a 44 percent stake for US$257 million, another 7 percent for $62 million. The $257 million price is based on initial agreement between the government and KPC reached on October 26, 2000. The price for the remaining 7 percent stake, is based on the $889 million price demanded by KPC for a 100 percent stake. This option means that the total price for the 51 percent stake will be equal to $319 million.
Second, selling a 37 percent for $216 million, and another 14 percent for $104 million, which is based on the median between the $889 price demanded by KPC and the $559 million offered by the government. The total price for the 51 percent stake in the second option would be equal to $320 million.
The third alternative is selling the first 37 percent stake for $216 million, while the price for the remaining 14 percent stake would be negotiated later on by the government and KPC.
Djoko said that the government preferred the second option.
KPC operates a vast coal mining site in East Kalimantan.
The company is obliged to divest up to 51 percent stake to the East Kalimantan administration. The divestment process was supposed to have been completed this year, but is being delayed due to constant disagreement over the price of the shares.
Meanwhile, Syaiful Teteng, a senior official of the East Kalimantan administration said that the three options offered by the government were nothing new as it had actually been discused with KPC during the October 26 meeting.
He said that if KPC shareholders had good will, they should have already completed the divestment program by now. (*)