House approves of Inalum acquisition plan

By Bernard Loebs

The House of Representatives has granted approval to the government?s plan to take over PT Indonesia Asahan Aluminium (Inalum) which owns a huge hydropower plant and an aluminum smelting plant in North Sumatra.

The approval was granted on Tuesday during a hearing between the House?s Commission VII which oversees mining and energy affairs and Minister of Energy and Mineral Resources Jero Wacik.

The Commission noted that the acquisition is important in order to support the growth of national economy and to add the value of mineral resources through smelting process.

It noted however that the government should allow the North Sumatra regional government to take an interest in the firm.

Inalum is operated by Japanese consortium Nippon Asahan Aluminium (NAA), which owns 58.8 percent shares. NAA is scheduled to hand over its 58.8 percent shares in Inalum later this month when its contract expires. But the company has been engaged in a protracted negotiation with the government over the selling price of the shares. NAA has demanded $650 million for the shares. The government initially offered $390 million but recently revised the offering price to $588 million.

No deal has been reached.

Inalum was set up in 1976 through an agreement between the government and its Japanese counterpart. The company runs the only aluminum smelter in Southeast Asia, in Asahan area of North Sumatra and utilizes hydropower plants Asahan I and Asahan II as its prime energy source.

Editing by Johannes Simbolon