KPC turns down govt?s offer, insists on hiring independent valuer

Shareholders of giant coalmining PT Kaltim Prima Coal have turned down three pricing valuation schemes offered by the Indonesian government on the company?s 51 percent shares arguing that the schemes had not been based on the work of an independent valuer, according to an executive of the company.

?We formally turned down the government offer in October 23 meeting,? Nunik Maulana, a spokesperson from Rio Tinto which holds 50 percent stake at KPC told Petromindo.com in an interview Monday.

Earlier, secretary general of the ministry of energy and mineral resources Djoko Darmono said that the government had offered three options on KPC?s shares to its shareholders.

The first two options put the value of the 51 percent of KPC?s shares at between US$ 319 to 329 million. The third option put 37 percent of KPC?s share at US$ 216 million while the price for the remaining 14 percent stake would be negotiated later on by the government and KPC.

?We cannot accept the government?s offer and we insist that the government using the service of independent valuer like what we have done,? said Nunik

?If the government does not have any money to pay the valuer?s fee, we could pay it using the coal royalty,? she said.

KPC shareholders, Rio Tinto and BP Plc had appointed Smith Solomon and Barney (SSB) as an independent valuer for them.

SSB valued the 100 percent stake of KPC at US$883 million. Based on the offer from KPC shareholders, the 51 percent stake at KPC would cost the local entity about $444 million. Meanwhile, the East Kalimantan administration, that has been eyeing the KPC stake for so long, has bargained it at a bit over US$ 300 million.

The director general of geology and mineral resources Wimpy S. Tjetjep had reported the case to Minister of Energy and Mineral Resources Purnomo Yusgiantoro.

Minister Purnomo had planned to report the case to coordinating minister for the economy and the President, Tjetjep said.

?By then we could know whether the government will appoint an independent valuer or will proceed with its divestment plan through initial public offering (IPO) in the capital market,? he added.

He quoted Purnomo as saying that the coal contract of work allowed divestment process through IPO.

Under the coal contract of work, KPC is obliged to divest up to 51 percent stake to Indonesian business enterprises. The divestment process, supposed to have been completed this year, is being delayed due to constant disagreement over the price of the shares.

The contract also stipulates that if government and KPC shareholders disagree on the divestment price, each party would have to appoint an independent valuer for itself. And, if they also fail to reach an agreement on the results of the valuer?s work, then both parties will have to jointly appoint one independent valuer, which will have the final say on the price of KPC?s shares.

Earlier, the government had reportedly hired a consultant to help it determine the price of the KPC?s shares. But, it had not treated the consultant as an independent valuer. (alex/godang)