North Sumatra govt wants to have shares with Inalum

The North Sumatra administration is seeking a share-ownership with PT Indonesia Asahan Aluminium (Inalum), an Indonesia-Japan joint venture whose contract will expire in 2013 after operating in Asahan, North Sumatra, for 30 years.

The Sumatra administration`s interest in the shares with Inalum comes up to the surface amid indications that the central government will take over the Japanese stake in PT Inalum.

While Japan is still offering a cooperation to continue the joint-venture, the central government has expressed its plans to acquire it in 2013 through the Government Investment Center (PIP).

Now, Indonesian owns 41.13 percent of Inalum`s stake while the remaining 58.87 percent belong to Nippon Asahan Aluminum (NAA). Fifty percent of NAA shares are owned by the Japan Bank for International Cooperation (JBIC) which represents the Japanese government and 50 percent others belong to 12 other Japanese firms.

The project began operating on January 6, 1976 based on a master of agreement signed on July 7, 1975 and would expire in 2013.

Minister of State Enterprises (BUMN) Mustafa Abubakar has sent a letter to the Asahan Authority on October 29, 2010, expressing the intention of the government to take over the Japanese shares with Inalum as of October 31, 2013.

As regard, the local government is also seeking for stake ownership.

In order to have stake with Inalum, the North Sumatra province will set up a desk in charge of discussing the portion of stake it could have with Inalum when it is taken over by the central government.

The plan to set up the desk was formulated in a coordination meeting last week with the North provincial Sumatran government, the Inalum Special Committee of North Sumatra`s Regional Legislative Assembly (DPRD) and representatives of ten district governments which overseas the operating areas of Inalum.

Chairman of the Inalum Special Committee Bustomi HS said North Sumatra was happy with the issuance of a Home Affairs decree on March 31, 2011 on the formation of a Working Group to end the Master Agreement on the Asahan Project.

He said that it was regulated in the minister`s decree that the North Sumatran provincial government and the local governments of ten districts in the Inalum operating areas could obtain stake ownership after Inalum had been taken over by the central government.

Therefore, North Sumatra needs to set up an Inalum Desk charged with the task of calculating the reasonable portion of stake for North Sumatra. "The Desk will represent North Sumatra in having dialog with the central government," Bustami said.

Head of Regional Development Planning Board of North Sumatra Riyadil Akhir Lubis said the central government had set up a team and sub-technical team to discuss the management of Inalum after its takeover in 2013. 

Therefore, his side hoped that the district governments should appoint their representatives immediately to the Inalum Desk. "They need to be appointed and sent immediately so that they would be able to follow the agenda discussed by the central government," Riyadil said.

Deputy Head of Toba Samosir District Liberty Pasaribu said that personnel of the desk must have comprehensive understanding of the share pattern that the government would make.

In the meantime, Hj Meilizar Latif, another member of the North Sumatra DPRD, said that Indonesia would be able to manage Inalum, even if without the involvement of foreigners.

"Indonesia must be able to manage it. Therefore, Inalum should not fall in the hands of foreigners after 2013," Meilizar Latif said. After all, almost all workers at Inalum are Indonesians. There are about 2,600 workers with PT Inalum. They are best Indonesian workers.

"The Indonesian sons are handling most of the activities of Inalum. Of the 270 Japanese workers at the beginning of the operations, only two are not yet replaced by Indonesians now. The two are in the top management positions," she said.

Now, Inalum has a production capacity of 230,000 - 240,000 tons per annum

She regretted if the government offered an open tender option on the management of Inalum after the completion of its contract in 2013 because all Indonesian sons in the company were already capable. "An open tender will enable the entry of foreigners again," she said.

PT Inalum booked a profit of US$12 million in 2010 while its debt burden amounted to US$70 million. This will disadvantage Indonesia if the company is put on tender, she said.

She said that instead of calling tender for it, it would be better to continue the joint-venture scheme with Japan.

Japan in the meantime is still offering its cooperation and expresses interest to resume the joint venture business with Indonesia.

According to Ambassador Yoshinori Katori, Japan hopes its cooperation with Indonesia in PT Inalum will continue following the expiry of its contract in the company in 2013.

"We still have a lot of time to discuss it before the expiration date comes. We will continue discussing the continuation of the project. What I can assure is that the project is very important for both countries," he said before academic community of Universitas Sumatra Utara (USU) in Medan last week.

But there are now strong indications that the government would take it over after the contract expires in 2013. 

"If asked whether we have plans to buy shares such as those of Newmont, we will say yes and the most immediate one is likely PT Inalum whose contract will expire in 2013," PIP Head Soritaon Siregar said over the weekend.

The PIP head said that after the acquisition the government would call a tender for the firm which would be open for local bidders.

"After the acquisition, if there are interested local companies, we will call a tender for it. But we will acquire its entire stake in the first place in 2013," he said

Source: ANTARA