Govt, KPC to seek independent appraisal over divestment row

The government and the shareholders of the giant coal mining company PT Kaltim Prima Coal (KPC) have agreed to seek independent appraisal to resolve the long dispute over the company?s divestment program, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said Friday.

Purnomo said that based on the mining contract signed between the government and KPC, if both sides failed to reach agreement on the price of shares to be divested, an independent appraisal must be sought.

He also said that if later on the two could still not agree on the price set by the independent appraisal, they could go to the international arbitration panel.

KPC is obliged to divest up to 51 percent stake immediately to the East Kalimantan administration. The East Kalimantan has been negotiating with KPC over the divestment program for two years now. But so far the two could not reach agreement on the price. KPC wants East Kalimantan to pay around US$448 million for the shares, while the provincial administration is only offering $319 million.

East Kalimantan officials have said that their price proposal had been consulted with Purnomo and other top officials of the ministry of energy and mineral resources.

East Kalimantan met with KPC officials and shareholders on Thursday in Jakarta. The meeting, which was facilitated by Purnomo, could not reach agreement on the price, but agreed to seek independent appraisal.

KPC is equally owned by Rio Tinto and BP.(Alex/Godang)