Govt disagrees with KPC over share divestment price

Director general of geology and mineral resources Wimpy S. Tjetjep said late on Wednesday that the government had challenged the US$800 million price set by coal mining giant PT Kaltim Prima Coal (KPC) for its 51 percent shares.

"We object to the $800 million price offered by KPC. So we'll hire a consultant to make appraisal," Wimpy told Petromindo.com.

The ministry of mineral resources and energy has asked KPC to divest 51 percent of its shares in the first quarter of this year. The government has given the East Kalimantan administration a priority to purchase the shares. But reports said earlier that the administration was ready to make the purchase at a price of less than $300 million. The administration would be fully backed up by a Jakarta-based private investor called PT Intan.

KPC, Indonesia's second largest coal producer, is equally owned by Rio Tinto and Beyond Petroleum, was supposed to complete the divestment program last year, but it was delayed due to dispute with the East Kalimantan administration over the size of the divestment. KPC initially insisted that it would only divest 37 percent. Under its mining contract with the government, KPC must gradually divest its shares to local investors.(godang)