KPC divestment: East Kalimantan refuses to disclose financing scheme, insists on 2000 valuation price

East Kalimantan administration still decline to reveal the source of its financing to acquire 51 percent stake of coal giant PT Kaltim Prima Coal should the former be declared eligible to purchase KPC?s shares.

?We don?t have to reveal our source of financing. What?s important is we have the money ready when the deal is done,? said Sukardi Djarwo Putro, East Kalimantan council speaker said during a hearing between the house of representative with KPC and East Kalimantan administration.

Sukardi accused that KPC shareholder BP Plc and Rio Tinto has no good faith in realizing the divestment.

He also said KPC shareholders had actually agreed last year to offer 44 percent shares of the company shares at US$257 million.

?The agreement had been reached in a meeting on Oct. 26, 2000 in the presence of the then general mining director general Surna T. Djajadiningrat and Lex Graefe, and Peter Vider representing KPC shareholders,? said Sukardi.

However, Noke Kiroyan, KPC president said the deal was not valid since the price offered was for year 2000 period. ?That price was good for year 2000 only,? said Noke. ?For year 2001, the new price must be set.?

KPC shareholders insisted that for 2001, the 100 percent value of KPC was set at $880, therefore pricing the 51 percent of KPC stake should be $448 million.

Central government and KPC shareholders had been at odds in determining KPC share and according to coal contract of work, whenever disagreement over divestment price occurred, each party should appoint independent valuer to determine the price. If by then agreement cannot be reached, both parties would then appoint one valuer.

The government had yet appointed the valuer because the budget allocated to pay the valuer must priorly be approved by the minister of finance.

East Kalimantan government had been insisting to become the only buyer of KPC shares and would only willing to pay the price based on October 26, 2000 agreement.

East Kalimantan administration had been rumored to cooperate with PT Intan Bumi Inti Pradana, a company controlled by businessman David Salim.

Emir Moeis, deputy chairman of commission VIII of the house of representatives which oversees oil, gas and mining affairs confirmed that PT Intan was involved in East Kalimantan bid to acquire shares of KPC.

?PT Intan is offering 5.1 percent of shares to East Kalimantan administration in return of the support,? said Emir.

Rumors had it that individuals in East Kalimantan administration had been involved in ?special deal? with PT Intan on top of the 5.1 percent deal.

Last week, the South Jakarta district court summoned KPC?s executives in connection with a lawsuit filed by the East Kalimantan administration concerning the company?s delay to fulfill its obligation to offer shares for sale to Indonesian parties.

The East Kalimantan administration was seeking damages of $776 million caused by the company?s delay to divest its shares as agreed in October of last year. (godang/alex)