Govt threatens not to extend Inalum license

The government may not to extend the license of aluminum producer PT Indonesia Asahan Aluminium (Inalum) when it expires in 2013 and take over the management of hydro power plant Asahan that supplies power to the company.

Director General of Electricity and Energy Utilization at the Ministry of Energy and Mineral Resources J Purwono said in Jakarta on Tuesday that local communities had never got power supplies from the hydro power plant which use water from Lake Toba to generate power.

“The power plant has a generating capacity of 600 MW but only 400 MW are used, wholly for producing aluminium (at Inalum's plant),” he went on.

Purwono made the statement amid reports that  Inalum is reluctant to deliver some of the power supplies from Asahan to the public in North Sumatra and Nangroe Aceh Darussalam, which are now experiencing serious power shortage following problems at the power plants owned by state owned electricity firm PT Perusahaan Listrk Negara (PLN). Inalum is a joint venture between the Indonesian government ((41.13 percent) and Japanese consortium Nippon Asahan Aluminum Co. Ltd (58.87 percent). The consortium comprises Japanese industrial giants such as Mitsubishi, Marubeni and Sumitomo.

PLN's Deputy Director for Power Plant Supervision Agus Darmadi said PLN had reached a barter agreement with Inalum which required the latter to supply up to 90 MW to the public for five hours during peak hours in a day. PLN will supply the firm with 30 MW for 15 hours outside the peak hours in a day in return. However,  Inalum has only supplied 40 MW.

"We shall continue negotiation to push Inalum to realize the barter deal," Agus said.

The government has often voiced concerns over Inalum and even threatened to pull out from the joint venture. The firm started operation in 1983 with a 30-year operating license. It produces 225,000 tons of aluminum per year, which are all exported to Japan. But, the firm has never booked profits, according to government officials. (Godang)