Govt forms special team to audit KPC share bidders

The government has formed a special team to carry out a due diligence audit on bidders of the 51 percent share that will be sold by East Kalimantan-based coal producer PT Kaltim Prima Coal?s existing shareholders as part of the company?s mandatory divestment program, Media Indonesia reported on Saturday.

Secretary General of Energy and Mineral Resources Djoko Darmono said in Jakarta on Friday that a senior official from the office of the Coordinating Minister of Economy acted as the chairman of the team and another high-ranking official from the Ministry of Energy and Mineral Resources as the team?s vice chairman.

In addition to the government?s financial advisors, the members of the team include representatives from the provincial administration of East Kalimantan and from province?s regency of East Kutai, he said.

According to Djoko, although representatives from the province had not yet confirmed their participation, the team could technically begin its due diligence process.

Djoko denied the accusation of the provincial administration that the government had its own agenda in the divestment of KPC shares.

East Kutai regent Awang Farouk admitted that his office was not interested in joining the team which he termed as not reflecting transparency. "We want those who are involved in the team comprise of independent professionals," he said.

According to the latest compromise, 31 percent of the 51 percent of KPC shares would be sold to the provincial administration and another 20 percent to the central government. The 20 percent that will be allocated for the central government will be auctioned under a competitive bidding process.

KPC, which operates a large coal mining area in East Kalimantan, is equally owned by world mining giants Rio Tinto and BP. Under its contracts of works, the company?s shareholders are required to divest 51 percent of their shares to local investors. According to the initial schedule, the divestment should be completed by July 31.

However, the mandatory divestment program does not run as expected due to a dispute over the percentage of the shares that must be sold to the central and local government. The local administration has demanded to buy the entire 51 percent stake. (*)