Govt, Bumi disagree on KPC shares price
Govt, Bumi disagree on KPC shares price
The Jakarta Post, Jakarta
The government will not raise the price of KPC shares as
demanded by the company's new owner PT Bumi Resources, a minister
said on Tuesday.
"The (100 percent share) price is still US$822 million. It
will not be changed," Minister of Energy and Mineral Resources
Purnomo Yusgiantoro said on the sidelines of the 29th IPA
(Indonesian Petroleum Association) Annual Convention and
Exhibition.
Purnomo made the statement following reports that Bumi did not
feel comfortable with the price level and had asked the
government to raise the price, citing increased coal prices.
Under the contract with the government, KPC is obliged to
divest up to 51 percent of its shares to local investors.
Following the recent acquisition of the entire stake in KPC from
the previous owners, Anglo-Australian mining giant Rio Tinto and
Anglo-American energy giant BP Plc, the divestment obligation now
lies with Bumi.
Prior to the acquisition, the government, BP and Rio Tinto
agreed to value KPC's entire stake at $822 million. The
government also granted the East Kalimantan provincial
administration the right to buy a 31 percent stake and the state-
owned coal firm a 20 percent stake.
Bumi's president Ari Hudaya said the price level determined by
the government and KPC's former shareholders was too low and no
longer reflected the market situation, where the coal price is
now on an upward trend.
Ari said high-quality coal such as that produced by KPC is now
valued at $32 to $35 per ton in European markets, as against the
usual price of $22 to $26 per ton. The price is believed to
continue to rise in the next two or three years.
"Given the high price of coal, the KPC divestment price (set
by the government and the previous shareholders) is, of course,
no longer reasonable," Ari said.
Based in Sangatta, East Kalimantan, KPC is the country's
second-largest coal producer, with an annual output of 18 million
tons. It exports about 93 percent of its coal to European and
Asian countries.
Bumi bought the entire stake in KPC owned by BP and Rio Tinto
for $500 million, including assumed debt. The firm used loans
from Singapore's United Overseas Bank (UOB), Credit Suisse Boston
(CFSB), Australia's Macquire Bank Ltd. and Leighton Financial
International to purchase the stake.
Following the acquisition, Bumi reshuffled the KPC board of
management. Sources have said the move caused concern among the
firm's middle managers and could spark protests among workers.