Monday, November 15, 2010

PLN plans to take over Inalum

State Electricity Company PLN is among the candidates to operate the assets of PT Indonesia Aluminium (Inalum) together with PT Aneka Tambang Tbk and state-owned securities firms (PT Danareksa Sekuritas).
Goverment still waiting for the response from the Asahan Authority after sent the letter to submit the proposal to take over Inalum to be operated by SOE.
PLN probably would only operate Asahan hydro-fired power plant, while the aluminum plant would be operated by Antam and the security firms that helped funding the takeover. Among some state-owned securities firms proposing to help funding Inalum are PT Danareksa Sekuritas, PT Bahana Securities, and the Assets Management Company (PPA).
The government controls a 41.12% stake in Inalum, while the rest is owned by the consortium of Japanese companies under Nippon Asahan Aluminium (NAA). NAA has submitted a proposal asking for extension for the contract on Inalum, which will expire in 2013. The bidding proposals from SOEs are scheduled to be enclosed by October 2010.
On the other hand, the team from the Japanese Ministry of Industry and International Trade is touted to have already arrived in Indonesia for the negotiation.
There were two Keppres drafts at the Cabinet Secretariat. The first draft contains the proposal from the Coordinating Ministry for Economic Affairs team and the second one contains the Ministry of Industry's proposal to the Coordinating Minister for Economic Affairs, the copy of which was sent to the Cabinet Secretariat.
Previously, Chairperson of the Asahan Authority Effendy Sirait said based on the letter of the State Minister for SOEs dated October 29, the Asahan Authority had sent a letter to Inalum asserting the government's decision to take over 100% shares in Inalum. On the other hand, he continued, the NAA had responded the letter and treated it as Indonesia's official position.
The NAA considers the content of the letter the government's stance. They still hope for rooms to negotiate. Article 27 clause 10 of the master agreement reads that the NAA has a right to negotiate period extension for the smelter operation since three years prior to the contract expiry date.
The request for the extension has to be followed by new significant investments to bolster innovation and expand smelter. To support Indonesia's position, the government through the technical team assembled by the Ministry of Industry was preparing several options to know whether the negotiation was worth continuing or whether the master agreement should be terminated.

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