Govt to assign independent appraiser to decide on KPC share price

The government has finally agreed to assign an independent consultant to appraise the share price of the coal mining giant firm PT Kaltim Prima Coal (KPC) in a bid to complete the latter?s protracted divestment program, according to a source.

The source said that the government would hold a tender to select the independent appraiser. He said that the state-owned securities firm PT Bahana Securities will join the bid.

KPC, which controls a vast mining site in Sangatta, East Kalimantan, is obliged to divest a 51 percent stake to local investors. The East Kalimantan administration has the top priority to purchase the stake. But the deadline for the divestment obligation has been delayed for several times particularly due to disagreement over divestment price. The new deadline is now March 2002.

The central government has valued the 51 percent KPC shares at a price range of between $319-329 million, while KPC shareholders, Rio Tinto and BP, set a price of $883 million for 100 percent stake or more than $442 million for the 51 percent stake. The KPC price valuation is based on the appraisal made by international financial consultant Solomon Smith Barney.

KPC shareholders rejected the government price valuation because it was not based on an independent appraisal.

According to the mining contract between the government and KPC, if the two sides fail to reach agreement on the divestment price, each party would have to appoint an independent price consultant for itself.

And if disagreement continues, the two would jointly assign a single independent appraiser.(Amoros)