KPC divestment still stalled over price difference

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said the divestment of shares at coal mining company PT Kaltim Prima Coal from the current owners to local entities was still dogged by a price difference of US$100 million between the offering and the bidding prices, Jakata-based daily Bisnis Indonesia reported on Saturday.

Purnomo said that the two parties, KPC shareholders and the government, must find the causes for the difference between the offer and bid prices, and they must move closer toward a possible agreed price.

"However, the price or the value of the stake is not yet agreed upon so that currently negotiation is still proceeding," Purnomo said while attending the celebration of merger between BHP-Biliton in Jakarta Thursday night.

A source told Bisnis Indonesia that KPC shareholders wanted to sell the 51 percent stake at US$448.8 million, while the government bargained it at US$309.9 million.

When asked about the difference of pricing, Purnomo refused to go into detail but he confirmed that there was a difference of around $100 million.

"What's certain is that the gap is still wide. It is estimated at around $100 million," he said.

A director of KPC, Lex Graesi, said that the party that had the rights to negotiate with KPC shareholders should be the central government, and not the local administration, nor the local legislative council.

"The East Kalimantan legislative council has no rights to be involved in deciding the price of this divested stake because the price will be decided based on the results of negotiations between the central government and KPC," he told AFX-Asia.

Purnomo shared Graesi's argument and said that the fate of the divestment of 51 percent stake at KPC would be determined by the current negotiations between the shareholders and the central government.

"In Article 26 of the contract of works, the government, through the Directorate General of Geology and Mineral Resources, has been authorized to negotiate," Purnomo said.

Earlier, the secretary of the East Kalimantan Committee for the Divestment of KPC Shares, Andi Harun, said there would be a dialogue among the central government, KPC shareholders (Rio Tinto and BP) and the committee on Monday to decide the pricing.

Graesi, however, said that KPC shareholders could not confirm their participation in the dialogue that would be held at the legislative council building. (*)