Divestment of coal producer KPC near closing
Leony Aurora, The Jakarta Post, Jakarta
The Ministry of Energy and Mineral Resources expects to wrap up its study into the divestment of a 32.4 percent stake in giant coal producer Kaltim Prima Coal (KPC) this week, an official says.
A team that was assigned to conduct the study needed more data before it could make a final decision, Mahyudin Lubis, director of coal and mineral endeavors at the directorate general of geology and mineral resources, said on Friday.
"Hopefully we will be able to conclude the study next week (this week)," he said.
PT Bumi Resources owns the majority stake in KPC.
KPC's contract, signed in 1982, obliges the company to divest up to 51 percent of its shares to local investors, whether to the government -- local or central -- individual citizens of Indonesia or national companies.
Last year, East Kutai regency administration acquired 18.6 percent of KPC from Bumi, meaning that the company has to sell 32.4 percent more shares to fulfill the contract.
Bumi's financial director Eddie S Soebari said over the weekend that, among the three companies to whom Bumi offered the stake, little-known mining service company named PT Sitrade Nusaglobus was "a strong candidate" to acquire the shares.
He said that the present value of KPC, which is the country's second-largest coal producer with some 18 million tons of coal produced each year, was estimated at US$1.4 billion as coal prices rose and the company's performance improved.
Roughly calculated, the 32.4 percent stake would worth some $454 million.
"We wish to conclude the sale as soon as possible. It's all a matter of technical problems," said Eddie.
Lubis said that the team needed to see whether all of the short-listed companies were indeed controlled by Indonesians and if all of them had equal chances of winning the shares.
"If the other two turn out to be foreign-owned, then it's a breach of contract," he said.
However, the team would not probe the appointed winner's financial capabilities, despite suggestions that it might not be able to afford such an acquisition, Lubis said.
"It's not our place to study that," he added.
When the study is finished, the team would send a recommendation to the Investment Coordinating Board (BKPM), which would approve the share transfer.
Two years ago, Bumi bought the entire stake in KPC from Anglo- American energy giant BP Plc. and Anglo-Australian mining conglomerate Rio Tinto for $500 million, including assumed debt, despite the government's estimated value of $822 million at the time.