Govt may appoint independent party to value KPC share

The government may have to appoint an independent appraiser to value the shares of the giant coal mining company PT Kaltim Prima Coal (KPC) if there could be no agreement on the price of shares to be divested by the company, according to a senior government official.

Director general for Geology and Mineral Resources Wimpie S. Tjejep was quoted by the Republika daily as saying that the government was still negotiating with the KPC management over the share price. He added that until now KPC still demanded a price of US$880 million for the 51 percent shares to be divested.

According to its contract with the government, KPC must divest up to 51 percent stake of its shares to local investor. The divestment program was supposed to be completed last month.

The East Kalimantan administration which has the firs priority to purchase the share, has demanded KPC to lower the price.

KPC has extensive coal mining site in East Kalimantan. The company is equally owned by Rio Tinto and BP.

The divestment program has been dragging on for more than a year. KPC initially insisted that it would only divest up 44 percent stake this year. But after intense negotiation, the company seems to finally agree to the 51 percent demand, although it asks for a high price. The East Kalimantan administration has earlier demanded some $350 million for the 51 percent stake.(*)