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)