KPC proposes neutral body to value its stake<\/p>\n
JAKARTA (JP): Coal mining company PT Kaltim Prima Coal (KPC)
\nhas urged the government to establish an independent appraiser to
\nvalue its assets and end the prolonged row over its divestment
\nprogram, according to one of its owners, Anglo-Australian mining
\ngiant Rio Tinto.<\/p>\n
Rio Tinto Indonesia's president Noke Kiroyan said on Tuesday
\nthe move was the only way to resolve the dispute between KPC, the
\ncentral government and the East Kalimantan provincial
\nadministration, because each party had not agreed on the value of
\na 51 percent stake the company is required to sell.<\/p>\n
\"We're supposed to establish the independent appraiser now
\nbecause all parties are sticking to their prices,\" Noke told The
\nJakarta Post.<\/p>\n
However, he was not convinced that all parties would reach
\nagreement on the price of the shareholding this year if the
\nindependent appraiser was appointed.<\/p>\n
According to the contract of work (COW) with the government,
\nKPC, which operates a huge coal mine in Sangatta, East
\nKalimantan, must offer up to 51 percent of its stake to local
\ninvestors. The divestment was to take place in stages between the
\nfifth and tenth years of commercial coal production, which began
\nin 1992.<\/p>\n
The company has offered some of its shares over the past few
\nyears but no deals were finalized.<\/p>\n
KPC's shareholders have agreed to sell 51 percent of its stake
\nto local investors this year.<\/p>\n
The East Kalimantan provincial administration is the only
\nparty who has bid for the stake.<\/p>\n
KPC has set the price for the holding at US$448.8 million,
\nwhile the central government valued it at $309.937 million and
\nthe East Kalimantan provincial administration was only willing to
\npay $319 million.<\/p>\n
The three parties have held several meetings, including one in
\nEast Kalimantan on Monday, to talk about the price but no
\nagreement has been reached.<\/p>\n
Noke said that an independent appraiser would value KPC's
\nstake based on several factors including coal prices and its coal
\nreserves.<\/p>\n
But, he said, KPC had yet to receive a green light from the
\ncentral government for the formation of the joint independent
\nappraiser.<\/p>\n
The provincial administration has reportedly objected to the
\nestablishment of the joint independent valuer, dismissing it as a
\ntactic of KPC to delay its divestment program.<\/p>\n
Some East Kalimantan provincial councillors have asked the
\ngovernment to terminate KPC's mining contract.<\/p>\n
Noke insisted that under the COW, KPC should not have to deal
\nwith the local government over the price of the stake.<\/p>\n
\"According to the COW, we should only negotiate with the
\ncentral government over the stake price,\" he said.<\/p>\n
He said that all parties should respect KPC's COW because
\nevery action to break the COW would damage the country's
\nreputation among foreign investors.<\/p>\n
KPC is jointly owned by Anglo-Australian mining company Rio
\nTinto and British-American oil and gas company Beyond Petroleum
\n(BP).(05)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/kpc-proposes-neutral-body-to-value-its-stake-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
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