Extension of Semen Gresik sale deadline sought

Extension of Semen Gresik sale deadline sought

JAKARTA (JP): The government has asked Mexican-based cement
producer Cemex SA de CV to extend its deadline for the purchase
of a US$520 million share in PT Semen Gresik, amid pressure from
legislators opposing the sale.

The Ministry of State Enterprises' director of state
enterprises restructuring and privatization, Parkesit Soeprapto,
said on Wednesday that the government needed more time to
consider whether it would go ahead with the sales, or bow to
legislators' demand.

"I was informed that the Ministry of State Enterprises'
secretary (Bacelius Ruru) has issued a letter for an extension of
the put option deal," Parkesit said during a hearing with the
House of Representatives' state budget commission.

Under the put option deal, the government has the right to
sell to Cemex its remaining 51 percent share in Semen Gresik for
$520 million. The put option deal will expire on Oct. 26.

Parkesit had no details of the plan and was unable to say
until when the government wanted to extend the deadline.

"The government is not ready with a solution," he said.

The put option deal is part of a 1998 sales agreement enabling
Cemex's entrance into the publicly listed Semen Gresik.

Pressure from legislators has forced the government to hold
back its put option right, although a deal would jack up
privatization proceeds from zero to $520 million.

That would convert to about Rp 4.99 trillion at current rates,
or over 70 percent of the government's targeted Rp 6.5 trillion.

But several legislators insisted the put option deal be
canceled, reasoning that relinquishing Semen Gresik to foreign
control was against national interest.

Legislator MS Kaban of the Crescent and Star faction warned
the national cement industry could fall to foreign control.

In the long run, he said, selling Cemex would prove more
costly to Indonesia than missing out on the Rp 4.99 trillion from
the sales proceed.

Next to Cemex, the Swiss-based cement group Holcim Ltd, and
the German-based cement firm Heidelberger Zement AG have also
secured deals to control majority shares in two large local
cement firms.

With an annual cement production capacity of 18.2 million
metric tons, the Semen Gresik Group ranks among Indonesia's
biggest in the industry.

The group is the outcome of a 1997 merger of PT Semen Padang
and PT Semen Tonasa.

Selling Semen Gresik is also facing resistance from the people
of Padang, who have rejected foreign control in Semen Padang.

They have asked the government to spin off Semen Padang from
Semen Gresik before selling the latter to Cemex.

Legislator Rizal Djalil of the Reforms faction said the spin
off plan was already approved by the previous administration of
President Abdurrahman Wahid.

"Gus Dur and Ibu Mega had principally agreed on the spin off
plan; it was a political decision," he said, referring to
Abdurrahman and former vice president Megawati Soekarnoputri.

Legislators often protest the sale of state assets to foreign
investors, while at the same time pressuring the government to
comply with its privatization targets.

Among these were a sale of large plantation fields to the
Malaysian based Kumpulan Guthrie bhd, and a planned sale of the
once largest private bank, PT Bank Central Asia to foreign firms.

Analysts said such protests added to legal uncertainties that
hampered attempts to woo much-needed foreign capital.(bkm)