KPC shareholders agree to 51% divestment<\/p>\n
JAKARTA (JP): Shareholders of coal mining company PT Kaltim
\nPrima Coal in East Kalimantan said on Tuesday they had agreed to
\nthe government's request to divest 51 percent of the company's
\nshares to local investors this year.<\/p>\n
Anglo-Australian mining company Rio Tinto and British-American
\noil and gas company Beyond Petroleum (BP), which each own a 50
\npercent stake in KPC, said in a statement they wanted to end the
\ndebate over the divestment and move forward.<\/p>\n
\"BP and Rio Tinto are both substantial long term-investors in
\nIndonesia. They believe that to continue the debate over the
\npercentage to be offered is not helpful,\" the statement said.<\/p>\n
Over the past few months, the two shareholders and the
\ngovernment have been deadlocked over the percentage of shares
\nthat must be sold to local investors under a mandatory divestment
\nprogram.<\/p>\n
According to its agreement with the government, KPC must offer
\nup to 51 percent of its stake to local investors. The divestment
\nwas to take place in stages from between the fifth and 10th years
\nof commercial coal production, which began in 1992.<\/p>\n
However, the Ministry of Energy and Mineral Resources approved
\nKPC's request to defer the beginning of the divestment for two
\nyears to 1998, from the original schedule of 1996.<\/p>\n
The company offered some of its shares in 1999 but no deals
\nwere made.<\/p>\n
Because of the two-year delay, KPC claimed it was only
\nrequired to divest 44 percent of its stake this year.<\/p>\n
\"However, despite the previous agreement, there have been
\ncontinued requests over the last six months that KPC revert to
\nthe divestment schedule as originally set out in the Coal
\nAgreement and offer 51 percent of its shares in 2001,\" KPC said.<\/p>\n
The company further said the 2001 divestment offer would open
\nas soon as it agreed with the government on the price of its 51
\npercent stake.<\/p>\n
\"KPC expects a significantly higher price to be set for this
\nyear's offer,\" the company said without citing a comparative
\nfigure.<\/p>\n
In 1999, the government and KPC agreed to a 30 percent
\ndivestment at a price of US$175 million.<\/p>\n
The director general for geology and mineral resources, Wimpy
\nS. Tjetjep, said that based on the 1999 agreement, the share
\nvalue of KPC's 51 percent stake was $297 million,<\/p>\n
But KPC said a $150 million reduction in the company's debt
\nand a 20 percent surge in coal prices since 1999 should increase
\nthe value of the company's shares.<\/p>\n
Under the existing contract, the value of the shares are based
\non negotiations between KPC and the government. If these
\nnegotiations fail to set a value, the two parties are allowed to
\nappoint independent appraisers to decide on an acceptable price.<\/p>\n
Should the appraisers fail to set the price, KPC and the
\ngovernment would jointly appoint a third appraiser, who must
\nchoose between one of two prices set by the previous appraisers.<\/p>\n
Wimpy also said KPC must offer its shares to more than one
\nlocal investor.<\/p>\n
The East Kalimantan administration has made it known it would
\nlike to purchase the entire 51 percent stake.<\/p>\n
State coal mining company PT Tambang Batubara Bukit Asam has
\nalso expressed interest in acquiring a stake in KPC.<\/p>\n
Bukit Asam president R.A. Sunardi said his company was waiting
\nfor KPC to submit a proposal. He also hinted that Bukit Asam
\nmight not necessarily seek to become a majority shareholder.<\/p>\n
Selling the entire 51 percent stake to the East Kalimantan
\nadministration would strip much of BP and Rio Tinto's control
\nover KPC.<\/p>\n
The coal mining company has an annual production capacity of
\n15 million tons. However, a series of strikes has cut its output.<\/p>\n
News agency AFX-ASIA cited Indonesian Mining Association
\nchairman Beni N Wahju as saying that KPC again was forced to
\nsuspend its operations last week when 60 local residents
\nblockaded the mine.<\/p>\n
Beni said a letter from KPC's external affairs general
\nmanager, Bambang Susanto, informed him that KPC's operation was
\ndown 75 percent.<\/p>\n
The residents demanded compensation from KPC, while the
\ncompany claimed it had already compensated residents.<\/p>\n
It was not clear what the compensation was for and KPC
\nofficials were unavailable for comment.(bkm)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/kpc-shareholders-agree-to-51-divestment-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}