Three nations to sell shares in AAF<\/p>\n
Zakki P. Hakim, The Jakarta Post, Jakarta<\/p>\n
Malaysia, Thailand and Singapore plan to sell all 27 percent of
\ntheir shares in the ailing fertilizer producer PT ASEAN Aceh
\nFertilizer (AAF) in Nanggroe Aceh Darussalam to any interested
\ninvestors, a senior executive says.<\/p>\n
AAF president director Rauf Purnama said on Tuesday that the
\nthree members of the Association of Southeast Asian Nations
\n(ASEAN) announced their plan in a shareholder's meeting last
\nmonth.<\/p>\n
"Right now we are using a consultant to evaluate the value of
\nthe shares owned by the three ASEAN members," he said.<\/p>\n
Indonesia, through PT Pupuk Sriwijaya (Pusri), holds 60
\npercent of AAF shares, while Malaysia, the Philippines and
\nThailand each has 13 percent, and Singapore owns only 1 percent
\nof the equity through Temasek Holdings Pte.<\/p>\n
The decision by the three countries to sell their shares
\nreflects frustration over the sustainability of the firm, which
\nhas been in the red for the past two years.<\/p>\n
Established in 1979, AAF reached its peak capacity in 1997 to
\nproduce 695,826 tons of urea fertilizer. The joint venture
\ncompany prioritized as its market ASEAN countries, with the
\nremainder going to China, India, Japan and Taiwan, among other
\nplaces.
\n However, AAF's financial condition has been deteriorating since
\nits operations were disturbed two years ago due to a lack of
\nnatural gas supply, Rauf said, "The firm suffers at least a US$3
\nmillion loss per month".<\/p>\n
The firm may not be able to pay the salaries of its remaining
\n800 employees, who are mostly maintenance staff, next month.<\/p>\n
Late last year, Megawati's administration announced that it
\nwanted to shut down AAF, which ceased much of its operations in
\nAugust 2003, as natural gas (a key raw production material)
\nsupply in the province was considered insufficient to cover
\nexport commitments and the needs of other manufacturers there.<\/p>\n
However, the proposal to shut down AAF must take into
\nconsideration other shareholder countries.<\/p>\n
Fertilizer firms in Aceh have been struggling to survive due
\nto natural gas supply problems as reserves from its main gas
\nfield, Arun, are dropping, while at the same time, the remaining
\nreserves are being converted into liquefied natural gas (LNG) to
\nmeet Arun's LNG export commitments to Japan and South Korea.<\/p>\n
In the meantime however, Rauf continued, the new
\nadministration, through the Office of the State Minister of State
\nEnterprises and ExxonMobil Oil Indonesia (EMOI), had promised to
\nprovide AAF with a supply of natural gas sufficient for six
\nmonths' production by July.<\/p>\n
"If we have no natural gas supply by July, we would have to
\nhand AAF over to the government. By which time the government
\ncould do whatever they like to the firm," he said.<\/p>\n
At the moment, EMOI is the sole natural gas producer in Aceh
\nand its output has largely been dedicated to Arun for LNG
\nproduction.<\/p>\n
EMOI has also seen its gas reserves declining over the past
\nfew years. This has affected Arun's operations as it now operates
\nonly four trains out of six trains in Lhokseumawe.<\/p>\n
At present, there are two other fertilizer firms in Aceh: PT
\nPupuk Iskandar Muda (PIM)-I and II.<\/p>",
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"sponsor": "Okusi Associates",
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