Govt seeks to privatize Bukit Asam by September

Govt seeks to privatize Bukit Asam by September

JAKARTA (JP): The government expects to sell some of its
shares in coal mining company PT Tambang Batubara Bukit Asam to
strategic partners by September this year as part of the
company's privatization program, a senior government official
said.

Director general for state enterprises at the Ministry of
Finance I Nyoman Tjager said on Thursday after selling shares to
strategic partners, the government would sell some shares to the
public.

"Once (market) conditions improve, we'll do an initial public
offering, which may take place one to two years from now," Nyoman
was quoted as saying by Antara.

Under this year's privatization program, the government has to
sell up to 49 shares in Bukit Asam.

But, Nyoman said, the government was still undecided about the
amount of shares it would divest to strategic partners, as it was
still evaluating Bukit Asam's value.

"Once the evaluation is completed, we'll know how much we want
to divest this year, and how much the proceeds will be," he
explained.

The coal company control coal reserves amounting to 6.7
billion metric tons, with an annual output of around 10 million
tons.

It has been seeking to raise its coal output but efforts are
hampered by the limited transportation capacity of the railway
that links Bukit Asam's mine in Tanjung Enim, South Sumatra with
Lampung's Tarahan port.

Around 84 percent of Bukit Asam's 6.7 billion tons of coal
reserves are located in Tanjung Enim, while the remaining is
spread over the Ombilin and Sawahlunto areas in West Sumatra, and
the Cerenti area in Riau.

The privatization of Bukit Asam has sparked concerns among
some legislators, who said the company's coal reserves were vital
to the country's energy supply.

Bukit Asam supplies coal for the Suralaya power plant in West
Java, which accounts for 30 percent of electricity supplies to
the Java and Bali islands.

Earlier this year, the Suralaya plant was close to being shut
down because of the shortage in coal supply.

Legislators noted that the future private owner of Bukit Asam
could defer the contracted coal supply to Suralaya, if export
prices were more favorable.

This possibility would put the Java-Bali power supplies at
risk, they said.

Bukit Asam sells around 70 percent of its coal to Suralaya and
exports the rest to Malaysia, the Phillipines and Thailand.

Separately, Bukit Asam's president Sunardi suggested the
government privatize only 367.65 million metric tons or about 5.5
percent of the company's coal entire reserves.

The figure, he said, was based on a recommendation by the
International Mining Consultant (IMC), which is an independent
mining consultant firm.

Sunardi however did not specify IMC's arguments behind its
recommendation.

Bukit Asam is one of 16 state firms slated for privatization
this year. The government hopes to reap some Rp 6.5 trillion
(about US$570 million) in privatization proceeds needed to plug a
widening state budget deficit.(bkm)