Government to sell stake in coal giant this month

The Jakarta Post, Jakarta

Despite the current uncertainties in the local financial market, the government is pressing ahead with its plan to sell a 12.4 percent stake in coal mining giant PT Tambang Batubara Bukit Asam (PTBA).

The sale of some 286.9 million shares through a secondary offering by the publicly listed firm is expected to be completed by the end of this month, according to Daniel Iskandar, a director of PT Danareksa Sekuritas, the underwriter of the offering.

The government and the company are planning to hold a roadshow in a number of Southeast Asian countries, as well as Hong Kong, from June 9 through June 11 in a bid to interest foreign investors in the shares.

The shares are tentatively due to be listed on June 27 or June 28.

The sale of PTBA is part of the government's privatization program for this year, which it is hoped will raise cash to help plug the 2004 state budget deficit.

But the current upheavals in the local stock market and the plunging value of the rupiah against the U.S. dollar has created worries among some officials and lawmakers as to whether the privatization program should be temporarily postponed to ensure higher proceeds.

One senior official, in fact, has said that the government was planning to postpone a secondary offering by the giant Bank Mandiri.

The rupiah has weakened by around 11 percent so far this year, making it the worst performing currency in the Asian region, due to a combination of political uncertainty at home in the run up to the presidential election, and a possible hike in U.S. interest rates, which has prompted some people to switch from rupiah-based assets to dollar-based assets. The falling rupiah has prompted investors to sell shares on the local stock market as the depreciation will increase the burden on companies in repaying their overseas debts, increase the cost of importing raw materials, and eventually create renewed inflationary pressures.

So far this year, the government has raised around Rp 3.6 trillion in privatization proceeds out of the total target of Rp 5 trillion.

Meanwhile, PTBA president Ismet Harmaini said the company was also seeking as much as US$500 million to finance a steam driven power plant in the Riau Islands.

"We now have around $150 million in cash, and we may raise more funds to finance the project through issuing bonds or seeking banks loans," he said.

He expects the project to start later this year.

Bukit Asam also plans to set aside 50 percent of its 2003 net profit to pay a dividend, he said.

The company's net profit last year increased 18 percent to Rp 210 billion (US$22.4 million) from Rp 178 billion in 2002.

PTBA also plans to acquire a couple of coal mining firms in East Kalimantan in the near future to help increase the company's coal production.