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Back to Home Page Business News September 03, 2001
Experts demand transparency over acquisition of KPC
By Mochammad N. Kurniawan
SAMARINDA, East Kalimantan (JP): Experts said on Saturday that PT
Intan, which has been appointed by the East Kalimantan administration
to finance the planned acquisition of coal mining giant PT Kaltim
Prima Coal (KPC), must "reveal its identity" in a bid to ensure
transparency.
Mining analyst Iswan Priady said that the lack of transparency over
the appointment of Intan had made local people suspicious about the
intentions of Intan, and doubted whether the investor would contribute
prosperity to them.
"We don't know yet who PT Intan actually is. It is their (Intan's and
the local government's) obligation to provide a satisfactory answer,"
Iswan said at a one-day seminar on the KPC divestment program.
KPC, which operates a huge coal mining site in Sangatta, East Kutai
regency, is obliged to divest a 51 percent stake to the East
Kalimantan government.
But there has been criticism of the lack of transparency in the
appointment of Intan, which some said was a Jakarta-based investment
company linked to a group of influential businessmen and former top
government officials.
The weekend seminar was participated by representatives of KPC,
officials of both the central and local government, businessmen, local
legislators, and mining analysts.
Intan, which was supposed also to speak at the seminar, did not send
any of its officials.
Iswan also criticized the East Kalimantan government for not holding
an open tender when selecting an investing partner for the acquisition
of the KPC shares.
He added that the administration should also first explore the
possibility of bank financing, instead of appointing a private
investor, to obtain a better deal.
Local government sources said that under the deal with Intan, the East
Kalimantan government would be granted a 5 percent stake in KPC if
Intan succeeded in purchasing a majority stake in the coal mining
giant.
Iswan said that many banks would be interested in providing loans to
finance the acquisition because the KPC coal mining operation had
proved capable of generating a high return on investment, which,
according to one estimate, could reach around 20 percent, compared
with Libor (the London interbank offering rate) of 3.6 percent.
He added that KPC had also enjoyed strong profits from the coal
operation, with average net profit between 1996-1998 reaching US$116
million.
"Anyone who invests there (in the coal mine) will secure a high profit
margin, as has been enjoyed by KPC," Iswan said.
KPC is equally owned by Anglo-Australian Rio Tinto, and
British-American oil and gas giant BP.
The divestment program of KPC has become controversial, with
negotiations going on for two years. The government and KPC are
currently in negotiation over the price of the company's shares.
Meanwhile, vice chairman of the East Kalimantan Chamber of Commerce
and Industry Zulkifli Sahab also objected to the local government's
deal with Intan.
Zulkifli said that local investors like himself were willing to
provide financing for the planned acquisition.
"We (local businessmen) have the money. There is no reason not to
support the acquisition," he said.
Assistant secretary of the Kutai Timur regency administration Isran
Noor confirmed that the provincial administration had signed a
memorandum of understanding with Intan, but said that the agreement
was not final.
"Other investors still have the opportunity to become a financing
partner as long as they can give us a better deal than Intan," he
said. (iwa)