Energy ministry OKs KPC divestment<\/p>\n
Leony Aurora, The Jakarta Post, Jakarta<\/p>\n
The Ministry of Energy and Mineral Resources has approved the
\nplan of the country's largest coal producer PT Bumi Resources to
\ndivest its stake in subsidiary PT Kaltim Prima Coal (KPC), a
\ngovernment official says.<\/p>\n
The recommendation letter was issued last Friday, Director
\nGeneral of Geology and Mineral Resources Simon Sembiring said on
\nWednesday.<\/p>\n
"I approved the (planned) change in the shareholders'
\ncomposition," said Simon.<\/p>\n
"After this, they'll go to BKPM," he added, referring to the
\nInvestment Coordinating Board, which would then approve the share
\ntransfer officially.<\/p>\n
Simon said that his office had studied whether the divestment
\nprocess was in line with the contract, which required that the
\nstake be bought by local investors and that the price not exceed
\nthe ceiling set by the government.<\/p>\n
KPC's estimated value has been pegged at US$1.4 billion,
\nmeaning that the ceiling for the 32.4 stake sale stands at $454
\nmillion.<\/p>\n
Simon reiterated that the team did not probe the appointed
\nwinner's financial strength, despite suggestions that it might
\nnot be able to afford such an acquisition.<\/p>\n
Little-known mining service company PT Sitrade Nusaglobus has
\nbeen announced as the buyer of the stake.<\/p>\n
Sitrade's president director Herman Afif Kusumo said that the
\ncompany would pay slightly less than $400 million for the stake.<\/p>\n
"We will fund it with equity financing, which is quite easy to
\nget nowadays, especially with the current high demand for coal,"
\nHerman told The Jakarta Post.<\/p>\n
Global investment firms Morgan Stanley and Lehman Brothers are
\ninterested in participating, he said. "We are still weighing
\nwhich one to choose," he added.<\/p>\n
Two years ago, Bumi bought the entire stake in KPC owned by
\nAnglo-American energy giant BP Plc. and Anglo-Australian mining
\nconglomerate Rio Tinto for $500 million, including assumed debt,
\ndespite the government's estimated value of $822 million at the
\ntime.<\/p>\n
KPC's contract, signed in 1982, stipulates that 51 percent of
\nthe company's shares have to be divested to local investors -- be
\nit to the central government, local administrations, individual
\ncitizens or national companies.<\/p>\n
In 2004, East Kutai regency administration acquired 18.6
\npercent of KPC from Bumi, leaving the stake to be sold at 32.4
\npercent.<\/p>\n
KPC is the second largest coal producer in Indonesia,
\noperating huge mines in East Kalimantan. The company produced
\n21.4 million tons of coal, of which more than 90 percent is
\nexported, last year.<\/p>\n
Coal prices have been rising in the past year amid growing
\nglobal demand. The price of coal sold by the company went up to
\nan average of $35 a ton in 2004 from $25.5 a ton the previous
\nyear.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/energy-ministry-oks-kpc-divestment-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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