Bukit Asam may issue bonds to take over KPC?s shares

State owned coal mining company PT Tambang Batubara Bukit Asam (PT BA) may issue bonds to raise funds for the purchase of East Kalimantan-based coal producer PT Kaltim Prima Coal?s 20 percent, Neraca daily reported on Tuesday.

PT BA President Director Ismet Harniaini said in Jakarta on Monday that with the current low interest rate, issuing bonds might be the best alternative in raising funds for the takeover of KPC?s shares although bank loans would also still be considered.

KPC which operates major coal mining concession in East Kalimantan is required to divest 51 percent of its shares as part of the company?s mandatory divestment program. PT BA has been selected to buy 20 percent, while the other 31 percent will be taken over by companies owned by the East Kalimantan provincial administration.

PT BA will also consider to use its own funds to finance the take over of KPC?s 20 percent share which will cost the company about US$160 million. According to the government the total value of KPC?s total shares is about US$800 million.

The Tanjung Enim, South Sumatera-based PT BA recently launched the initial offering of its 15 percent share as part of the government?s divestment program. About 90 percent of the proceeds from the sale of the shares went to the state coffers, and the remaining for the company. The offering of the shares which were sold at Rp 575 each was oversubscribed thanks to the positive response from foreign investors.

PT BA will launch its second offering in the second semester of next year to meet its target to divest 35 percent of the government?s shares in the company.

Meanwhile Bisnis Indonesia reported that PT Bukit Asam was only able to produce 9.8 million tons of coal this year, far lower than the initial target of 11.2 million tons due to transportation problem from its mining area in Tanjung Enim to coal terminal in Tarahan, Lampung.

About 6.1 million tons of the total production were shipped to state electricity company PLN?s subsidiary Indonesia Power, 1.2 million tons to PLN, about 300,000 tons to PT Semen Baturaja and about 200,000 to PT Indah Kiat. Bukit Asam also exported about 360,000 tons to Malaysia?s Tenaga Berhard, and about 500,000 tons to Thailand?s Thaipower.

According to him, the transportation problem occurred due to a tariff dispute between PT Bukit Asam with state railway operator PT Kereta Api Indonesia, which transports all of its coal production to the Tarahan coal terminal in Lampung.

With the help of the government, PT Bukit Asam and PT KAI have agreed to increase the tariff to Tarahan coal terminal in Lampung to Rp 37,000 per ton, on the condition that the total volume of coal delivered reach 8.5 million tons a year. While the tariff for the transportation of its coal from its Tanjung Enim office to Kertapati railway station in Palembang is set at 20,000 per ton, if the total delivery reaches 2 million tons a year.

Ismet said that PT KAI had agreed with the new tariff but the company could not meet the total delivery target. (*)