Govt orders KPC to continue with divestment

Government said on Monday it had ordered East Kalimantan coal mining firm PT. Kaltim Prima Coal (KPC) to offer its 32.4 percent shares to Indonesian owned entity as part divestment obligation under the coal contract of work.

?The government had ordered KPC to offer 32.4 Percent shares for sale this month,? said Mahyudin Lubis, a senior official at the ministry of energy and mineral resources. Lubis said that under the CCoW, KPC would negotiate with the government to determine new valuation price of KPC. Previous valuation price set by government and former shareholders; BP Plc and Rio Tinto was US$822 million for KPC?s 100 percent shares.

Government had earlier approved the sale of 18.6 percent shares of KPC to East Kutai regency administration for $105 million.

Under the CCoW, KPC must sell 51 percent of its shares to Indonesian owned entities.

Meanwhile, an official from PT. Bumi Resources, which controls KPC, said the company is working on the new valuation it was going to propose to the government. ?We are working on it now,? said Bumi Resources corporate secretary Peter Tabalujan when contacted by Petromindo.Com. But he did not say whether Bumi could meet the April deadline set by the government.

He added that Bumi would likely to appoint financial powerhouse Salomon Smith Barney (SSB) to act as consultant to determine KPC's value. SSB was the same consultant hired by BP and Rio Tinto in 2002. ?SSB has already has a considerable experience in determining KPC?s value,? he said.

KPC, which is located in East Kutai regency, East Kalimantan is one of Indonesian top coal miners, planning to produce 26 million tons of coal this year. (Godang)