Govt in dispute with Hutchison over privatization contract
Govt in dispute with Hutchison over privatization contract
Rendi A. Witular, The Jakarta Post, Jakarta
The government has said it will pursue action against a Hong
Kong-based seaport operator that it accuses of breaching its
privatization contract.
A deputy at the Office of the State Minister for State
Enterprises, Ferdinand Nainggolan, accused seaport operator
Hutchison of failing to make the required investment in PT
Jakarta International Container Terminal (JICT), which it
acquired in 1999 through the government privatization program.
Hutchison now owns a 51 percent stake in JICT, the country's
largest container terminal company.
Ferdinand said the government would issue a golden share, or
controlling interest in JICT, to state-owned seaport company PT
Pelindo II, which owns 48.9 percent of the container terminal
company. The remaining shares are held by employees.
Analysts said that with the golden share, Pelindo II would
have the veto right to annul the privatization contract, allowing
it to buy back the 51 percent stake in JICT from Hutchison.
The share buyback option is stipulated in the privatization
contract.
"This is all part of the post-privatization process, in which
we evaluate whether the investor (Hutchison) has fulfilled its
obligations to the Indonesian government, such as enhancing the
infrastructure and service at JICT," Ferdinand said.
He said the golden share could be issued at an extraordinary
shareholders meeting at the end of this month if Hutchison failed
to explain its failure to fulfill the privatization contract.
Ferdinand said Hutchison has failed to invest some US$28
million to upgrade the information technology system at JICT.
He said Hutchison was also being blamed for the poor service
at JICT, which had resulted in complaints from six international
liners -- APL Indonesia, Maersk Sealand, P&O Nedlloyd, OOCL, TSK
Line and CMA-CGM & ANL.
Ferdinand said Hutchison had the right to challenge the
government's accusations. The government would then appoint an
independent auditor to examine whether or not Hutchison was in
compliance with the privatization contract.
JICT president W.S. Wirjawan, however, denied that his company
had violated the contract.
He told the Post that Hutchison had invested some $400 million
to enhance the facilities at JICT, adding that until now the
company had not formally received any complaints from the
government.
Wirjawan also said the government did not have the right to
unilaterally issue the golden share without the endorsement of
the shareholders meeting.
He warned that if the government took this step, it could
further undermine foreign investor confidence in the country,
especially the government's privatization program.
The government plans to sell a number of state-owned companies
this year in a bid to raise some Rp 8 trillion to help finance
the 2003 state budget deficit.