Govt to conduct due diligence over KPC stake

The government plans to conduct a due diligence on the value of shares of coal mining company PT Kaltim

Prima Coal that currently offered for the divestment by the company shareholders as the government considers the price set by the shareholders as too high, Kompas daily reported on Monday.

Director General of Geology and Mineral Resources Wimpy S. Tjetjep said in Jakarta on Sunday that the government would check whether the price offered by KPC shareholders really represented the value of its coal output.

"On Monday, the team will depart to East Kalimantan to conduct onsite checking on the shares value. The due diligence will take about three months, after that the government will get a conclusion from the due diligence," Wimpy said.

Under its contract of works, KPC shareholders are required to divest 51 percent stake at the company to local entity this year. The shareholders value the 51 percent stake at US$400 million, which is considered too high by the government.

Differences in prices have made it difficult for KPC shareholders to divest the stake.

Earlier, the secretary general of the Ministry of Energy and Mineral Resources, Djoko Darmono, said that the establishment of an independent team to determine the value of the stake would be the most appropriate way out to break the current impasse.

Rio Tinto and BP, which equally own KPC, have actually been required to divest their ownership at the company starting in March 1996, but they always failed to sell their stake. (*)