Govt consider KPC share prices too high

The government is of the opinion that the price offered by shareholders of coal mining company PT Kaltim Prima Coal for the divestment of its stake to local entity is still too high, that is US$889 million for 100 percent stake.

Director General of Geology and Mineral Resources, Wimpy S. Tjetjep, said that the government would continue to negotiate with KPC shareholders and find a common ground of the prices, based on realistic calculation of the stake value.

In 1999, Wimpy said, KPC offered its 35 percent stake to the government at US$170 million.

"Thus, the government expects with 51 percent stake on offer now, the price should range at about US$300 million," Wimpy said after meeting with Caretaker Minister of Energy and Mineral Resources Purnomo Yusgiantoro.

Under its contracts of works, KPC, owned equally by Rio Tinto and Beyond Petroleum, is required to divest 51 percent of its stake to local entity this year.

Meanwhile, Rio Tinto president Noke Kiroyan said that his party wanted also to reach a common understanding with the government, and thus was prepared to lower its offer price for the 51 percent stake.

Kiroyan added that the company would stick to mechanism of divestment stipulated in its contract of works, and hoped that the government would do just the same. (*)