West Sumbawa Govt Pressing for Newmont Stake

JAKARTA, KOMPAS.com - The West Sumbawa district government is pressing ahead with its demand to be given the right to buy the seven percent divestment stake in PT Newmont Nusa Tenggara (NNT), which operates the Batu Hijau mine in West Nusa Tenggara (NTB) province.

The head of West Sumbawa district is even threatening to temporarily stop the operations of the country’s second-largest copper and gold mine company if the central government realizes its plan to buy the seven percent stake.

Last week, civil servants, students and other components of the local people took to the streets to demand the seven percent divestment share, which the central government has decided to buy. The Indonesian government, through the Government Investment Center (PIP) has written to PT NNT about its decision to buy the seven percent stake in PT NNT.

"I am not convinced that the central government will realize its plan to acquire the seven percent NNT divestment stake because the finance minister is required in the first place to make a calculation of its advantages and disadvantages as otherwise it would face problems," West Sumbawa District Head Zulkifli Muhadly said on Sunday.

The problems the central government can face include rejection by the House of Representatives (DPR)’s Commission VII on energy affairs and Commission XI on financial affairs and resistance by the local governments, both district and provincial governments.

As regards, Deputy Chairman of DPR’s Commission XI Harry Azhar Azis, has also criticized the government’s move to acquire the company’s shares before it was thoroughly deliberated with the House.

According to Harry Azhar Azis, Finance Minister Agus Martowardoyo had agreed to deliberate it with the House but it turned out to move ahead even before the deliberation was held with DPR. West Sumbawa district Head Zulkifli Muhadly even threatened to temporarily halt NNT operations if the government realized its plan.

"It is too risky for the finance minister to realize the plan. That’s why I don’t believe the central government will do it. So, let's wait and see," he said.

He said that he would follow the local people’s aspirations and do what they wanted it to do. "I want to do what the people want me to do. So far, the locals are willing to stop the firm’s operation if the government realizes its plan. As the district head, I will stop it if they ask me to do if the central government does realize its plan," he said.

However, if the people of West Sumbawa do not want the temporary closure the district head promises to stay silent. "I will keep quite, though I am not sure they do not want the closure," he said.

Zulkifli said the reason for the temporary closure of the mining company because the problem would not create conducive climate where the people’s aspirations were not followed.

"If not conducive, the operations should be halted. If the locals blockade the access or entrance into NNT, the reason to stop the operation for the time being is enough," he said.

The district head said that the people of West Sumbawa wanted the stake as a form of appreciation of the firm for the local people after its 10 years of operation in the district.

"If the seven percent are given to us it would constitute an appreciation by NNT for the local people after operating more than 10 years," said Zulkifli. He said that the people had not yet benefited from the presence of the company in the past 11 years.

He stated that its presence even brought social economic impact where people experienced high inflation rate which was the highest among regions in Indonesia. "The inflation impact has decreased the local people’s purchasing power, not to mention the spread of HIV/AIDS disease."

In the meantime, the provincial government also needs to receive compensation if the central government acquire the seven percent stake. "The provincial government must receive compensation if it is the central government which purchases the seven percent divestment stake. The regional government also wants the seven percent shares," Deputy Chairman of the NTB Legislative Assembly (DPRD) Suryadi Jaya Purnama said on Monday.

Suryadi who comes from the Prosperous Justice Party (PKS) said that he had also asked other political parties to help fight for the interest of the regional government in the acquisition of the seven percent divestment state worth US$271.6 million.

The seven percent purchase is the last phase of the divestment process of Newmont Nusa Tanggara in accordance with Article 24 of the work contract in 1986, according to Hadiyanto, the director general for state asset affairs of the Finance Ministry.

Newmont as a foreign firm has passed several phases of divestment process since 1996. Based on the law, the company is required to gradually sell a total of 31 percent of its stake to the government or local parties.

Up to 2009, 24 percent of the divestment process had been carried out, leaving another seven percent in the last phase for 2010. The 24 percent divestment of Newmont’s shares from 1996 to 2009 period was held in 2009.