Indonesia's state-owned Krakatau Steel is one lucky bride, considering it has five highly eligible suitors – ArcelorMittal, Tata Steel, Essar Steel, BlueScope Steel and Posco - lining up for its hand.

While the first three have obvious India connections (although ArcelorMittal has its headquarters in Luxemborg), BlueScope is an Australian company, which has a joint venture with Tata Steel and Posco hails from South Korea. However, the latest news says that the last-named has denied official interest in the stake sale.

Ansari Bukhari, director general for metal, machinery and textiles in Indonesia, had said that the first four, namely ArcelorMittal, Tata Steel, Essar Steel and BlueScope had evinced interest, while Enterprises Minister Sofyan Djalil had mentioned Posco's name.

However, yesterday, the Korean company  said, ''The Indonesian government has not announced details of a privatisation plan for the company yet and we have not expressed interest in the company''.

Krakatau Steel produces 2.5 million tonne per year and is valued at $1.2 billion. So, effectively, a 40-per cent stake, which the Indonesian government is reportedly interested to sell, will cost around half a billion dollars.

"Tata Steel's CEO Indranil Sengupta had earlier planned to meet with minister of industry Fahmi Idris sometime on 5 or 6 May. He has some questions on the government's plan to privatise Krakatau Steel," Bukhari had at the beginning of this month.

It was also reported that BlueScope had expressed its desire to meet the country's Industry Minister on 8 May or 9 May to discuss the privatisation. On 10 April ArcelorMittal CEO Lakshmi Niwas Mittal met Indonesian President Susilo Bambang Yudhoyono and expressed his interest to invest $3 billion in the country's mining and steel companies.

Yesterday, Essar Steel said it was still interested in the sale and was awaiting a privatisation plan for the company. A spokesman for the diversified Essar group said Essar Steel had submitted an expression of interest.

''We are not aware of any formal process of privatisation. If and when the process is initiated, we will examine such opportunity,'' he said.

However, the government's proposed plan to privatize Krakatau Steel, the country's largest steel producer, continues to stir heated debate at the House of Representatives, with many lawmakers opposing the plan. In response to the government's contention that funds infusion due to privatisation will improve the company's output, they say that such funds may be obtained on loan from banks.

Members of several major House factions, including the Indonesian Democratic Party of Struggle (PDI-P), the Prosperous Justice Party (PKS), the Democratic Party and the National Mandate Party (PAN), have asked the government to reconsider selling its stake in Krakatau Steel.

"I was informed many banks were willing to lend money to Krakatau Steel, so the government should discontinue its plan to sell the company," Andi Salahudin of the PKS said Monday.

Refrizal, another representative, added, "We're against this, as well as the government's plan to privatize Krakatau Steel. It would be better to turn to bank loans. Many banks have expressed interest in financing Krakatau Steel."

Soekarjo Hardjosoewirjo of the PDI-P questioned the urgency of privatizing Krakatau Steel, saying it is a strategic national asset. "Is it that urgent to sell Krakatau Steel? If the government really needs money for expansion then it is for what specific purposes? Isn't there any other option to raise money besides privatization?" Soekarjo said.

In response, enterprises minister Sofyan Djalil said that the government had no intention of selling a national asset just for the money. "Please don't look at it that way. The government has no intention of benefiting through this privatization program," he said.

He said that the government needed to boost the production of the company from 2.5 million tonne to 5 million tonne per year to meet the national demand of 7 million tonne per year, and for this money was required.

In comparison, ArcelorMittal, Posco and Tata Steel, the No.1, No.3 and No5 in the global stakes, produced 109.7 million tonne, 30.5 million tonne and 28.2 million tonne of steel respectively in 2006. For 2007, the figures are even higher.

Krakatau has not been able to raise its production capacity due to lack of funds and technology, according to Indonesian Vice President Jusuf Kalla. This causes Indonesia to import 6 million tonne per annum, according to the country's investment board.

Kalla said it was not possible for Krakatau Steel to make profits if it did not engage in the steel industry from the upstream to the downstream levels like Mittal or Tata and other steel industries in the world.

"Krakatau Steel has for the past two years been requested to invest $60 million in its upstream operations in Kalimantan but has until now not done it. So, we should know the limits of our own capability. Spirit is important but spirit alone is not enough," he said.

Thus, he said, Krakatau Steel must have additional capital in order to increase its production capacity to meet the existing need. The strategy of borrowing money to increase Krakatau`s capital was difficult to implement as to reach the capacity to turn out the seven million additional tonne of steel per year, the company would need $4.8 billion in cash, he said.

"Who will give us such a big loan," he remarked.

Nearly 20 per cent of the production was exported and the rest sold at home, according to president director of the company Fazwar Bujang.

Besides, he said that currently the steel producer must control not only the down stream sector but also the upstream sector of the industry; otherwise the company would not have smooth supply of its materials.

Last year, the company posted a net profit of around 370 billion rupiah (some $40.66 million). In the first quarter of 2008 alone, the figure already reached 400 billion rupiah ($43.96 million), according to the company.