Government's team to assess KPC's share price

The government will assign a special team to assess the fairness of the share price of East Kalimantan-based PT Kaltim Prima Coal (KPC) as proposed by the company's management, Koran Tempo reported on Friday.

Mahyuddin Lubis, the director for coal division at the ministry of energy and mineral resources, said in Jakarta on Thursday that the assessment would cover, among others, the operational performance, production facilities and future production target.

He said that the assessment would be needed to determine the fair price for the coal producer's share that would be used as the price reference for the divestment of the company's 32.4 percent shares.

Bumi Resources, the majority shareholder of the company, has put a price tag of US$1.98 billion for the entire stake of KPC shares. The price proposal has surprised potential buyers because it is almost 200 percent higher than those set by KPC's former owners Rio Tinto and BP.

KPC's former shareholders, Rio Tinto and BP, were required to divest up to 51 percent of its stake in the coal producer two years ago as part of the mandatory divestment requirement stated in the company's contract of works. But the divestment programs had been delayed because local companies which had been named to buy the shares felt the price was unrealistically too high.

Bumi Resources, which took over KPC last year, had already sold 18.6 percent of the company's shares to East Kutai regency's authority immediately after it acquired the mining company. It means that the company needs to sell another 32.4 percent in order to complete the mandatory divestment program. (*)