Government considers Cemex ownership in Semen Gresik
JAKARTA (JP): The government is considering raising the ownership of Mexican-based cement producer PT Cemex Indonesia in state-owned Semen Gresik Group (SGG), as part of a compensation scheme for spinning off SGG's subsidiary PT Semen Padang, according to a senior government official on Monday.
"One of our ideas is to raise Cemex's stake in Gresik," Nyoman Tjager told reporters following a post-Idul Fitri gathering.
He said that Cemex must be compensated for relinquishing Semen Padang, but he declined to reveal any details on the compensation schemes currently under consideration.
"We will have a decision on a compensation scheme quite soon," Nyoman said.
He said he had yet to present the proposed scheme to the related ministers who would decide on the divestment of Semen Padang.
The government is mulling spinning off Semen Padang from its parent company, partly due to local sentiment of the Padang people against Cemex's ownership in the company.
In 1998, Cemex paid the government US$114.2 million for a 25 percent stake in SGG, a holding company comprising of PT Semen Gresik, Semen Padang and PT Semen Tonasa.
Cemex plans to become a majority owner in SGG and, according to the company, the 1998 agreement with the government included a gradual rise in Cemex's stake in SGG.
But because of local resentment against foreign control in Semen Padang, the government never divested more of its stake to Cemex.
Spinning off Semen Padang from SGG would pave the way for Cemex to become a majority shareholder in SGG.
Finance Minister Prijadi Praptosuhardo confirmed plans to divest Semen Padang from SGG.
"We want to spin off Semen Padang, but we don't know how," he told reporters.
SGG, a publicly listed company on the Jakarta Stock Exchange has a combined annual production capacity of 18.2 million metric tons of cement.
The group was formed in 1995 by the government, in an effort to prevent private cement producers from controlling the domestic market.
Semen Gresik paid Semen Padang and Semen Tonasa a total of Rp 1.06 trillion for their stakes.
Head of the Capital Market Supervisory Agency (Bapepam) Herwidayatmo said that the government must also pay compensation to SGG for spinning off Semen Padang.
"There will be no problem if all compensation payments are clear. By releasing Semen Padang there must be compensation to the current shareholders of Semen Gresik," he explained.
Meanwhile, Semen Gresik said it expected output to rise by 10 percent in 2001, President Director Urip Timuryono was quoted as saying by the Dow Jones news agency.
"Total production volume this year will be 10 percent higher than last year because the market is getting better," Urip said.
He didn't offer figures, but the latest data from the Indonesian Cement Association shows that Semen Gresik's cement sales reached 11.8 million metric tons during the first 10 months of 2000, up from 10.6 million tons during the same period in 1999.
Urip also said he expected Semen Gresik's 2000 net profit to be higher in 2000 than in 1999, but didn't offer further details. Semen Gresik's full year results have not been announced, but the company posted a net profit of Rp 301.83 billion in the first nine months of 2000.
The nine month profit -- up from Rp 104.03 billion for the same period in the previous year -- was due largely to a rise in net sales to Rp 2.719 trillion from Rp 2.315 trillion. (bkm)