TEMPO.CO, Jakarta - A professor of International Law from the University of Indonesia Hikmahanto Juwana viewed that there is a state loss potential in Freeport Indonesia stake`s transaction.

It is possible to happen if Indonesia Asahan Aluminum (Inalum) makes the purchase before the Ministry of Energy and Mineral Resources issued the renewal permit.

“The state loss is considered to occur because the purchasing price of participating interest is based on the price after a renewal permit, while the permit from the Energy Ministry has not yet been issued,” Hikmahanto said in a written statement on Saturday, July 14.

On July 12, Freeport McMoran agreed to release 51 percent of Freeport Indonesia`s shares to Inalum. The state holding company will complete the purchase transaction in the next two months.

Read: Govt Allocates US$385bn for 51 Stake in Freeport Indonesia

Inalum CEO Budi Gunawan Sadikin said the transaction value amounted to US$3,85 billion. The holding will spend US$3.5 billion to buy 40 percent of Rio Tinto’s participating interest (PI) rights in Freeport Indonesia.

Hikmahanto said the London Stock Exchange website mentioned that the price of 40 percent of PI was at US$3.5billion. He viewed that the price has been calculated until the renewal concession of Freeport Indonesia until 2041.

He suggested Inalum not to make any purchases prior to the issuance of renewal permit from the Energy Ministry.

“Otherwise, in the future, Inalum can be suspected by the law of committing a corruption,” said Hikmahanto, adding that it is possible since the management is considered to have harmed the state finances when purchasing the Freeport's shares.

MUHAMMAD HENDARTYO