New KPC team: FA agreement no longer exists

The government?s new team for the mandatory divestment of coal producer Kaltim Prima Coal (KPC)?s 51 percent shares would no longer use the framework agreement (FA) signed by the government and KPC management as the basis for the divestment of the coal mining operator?s shares, Bisnis Indonesia reported on Thursday.

"The divestment will no longer be based on the FA agreement. The divestment will instead be based on the coal produce?s work of contract," the chairman of the new team, Roes Aryawijaya, who is also the deputy of State Minister for Stated Owned Enterprises.

Unlike the previous team which was under the direct supervision of the Minister of Energy and Mineral Resources, the current team is directly controlled by the Office of State Minister for State Owned Enterprises.

Roes said that the new team would no longer use the FA agreement because the life span of the agreement had expired on April 30, last year. The agreement, among others, gave the buyers six months to complete the purchase of KPC?s shares.

He said that under KPC?s contract of works, the appointed bidders could directly carry out its due diligence audit. "We expect that the due diligence can be completed in three months. During such a period of time, bidders and KPC can negotiate the price of the shares," he said. But he said that the price for the 51 percent of KPC shares would be retained at US$419.2 million as previously decided.

Under the previous agreement, 31 percent of KPC?s shares will be sold to the East Kalimantan administration through local companies and another 20 percent to state owned coal producer PT Tambang Batubara Bukit Asam. (*)