EMP to spin off Lapindo Brantas

PT Energi Mega Persada (EMP), an affiliate of the Bakrie Group, will spin off PT Lapindo Brantas Inc from its operation and turn the gas producer into an independent business entity, Bisnis Indonesia reported Wednesday.

A source told the daily that the separation would be carried out in order to help EMP to avoid the high reconstruction and compensation costs Lapindo had to pay due to the massive mudflow from one of its exploration wells in Sidoardjo, East Java.

Lapindo, owned 100 percent by EMP, has to bear the reconstruction cost and compensation caused by the mudflows which have damaged hundreds of rice fields and residential areas near the company's exploration well.

"The Bakrie family will likely take over Lapindo shares," the source said.

Investor Relations of EMP, Herwin W. Hidayat, however, said that the company was still studying a number of plans to stop the mud flow which has taken place more than three months.

But he did not say if the spin-off was one of the plans. (*)