Govt resumes Semen Gresik talks with Cemex

JAKARTA (JP): The government reopened negotiations yesterday with Mexico's Cemex SA de CV over the stalled sale of the state- owned cement maker PT Semen Gresik.

State Minister of the Empowerment of State Enterprises Tanri Abeng said yesterday Cemex was expected to come up with a new price proposal within two weeks.

"We will start talks with Cemex today," he said at a breakfast gathering with journalists, adding that a second bidding process to top Cemex's price offer would be completed within another two weeks.

"We expect a final deal can be reached within four weeks from now."

The privatization plan has been interrupted by objections from the West Sumatran community against foreign majority ownership of PT Semen Padang, a wholly owned subsidiary of Semen Gresik.

The West Sumatran people hold a cultural right to the land where Semen Padang's facilities are located.

The protest caused the government to back off from the earlier privatization formula which would have allowed the strategic investor to purchase 51 percent of the government's 65 percent stake in the publicly listed firm.

The government announced last week that it would only sell 14 percent of its share.

Cemex is the preferred strategic investor for Semen Gresik after it won the initial bidding process in June by offering US$1.38 per share for a 35 percent stake in Semen Gresik, and another 16 percent to be purchased from the local stock market through a tender offer mechanism.

The status has provided Cemex with the right to top any price offer made in the second bidding process, which is expected to be participated in by Germany's Heilderberger Zement AG, Switzerland's Holderbank and France's Laferge Asia Pacific, which under the earlier scenario were to come up with a price proposal on Aug. 19.

Semen Gresik is the first of the 12 state-owned companies to be privatized this fiscal year ending March 1999.

The government expects to raise about $1.5 billion from the privatization to help finance the State Budget which is heavily burdened by various subsidy committments to help the poor in surviving the current economic crisis.

Under the earlier scenario, the government was expected to get at least $287 million from the Semen Gresik sale.

Tanri admitted that the withdrawal from the earlier scenario was a "setback" for the Semen Gresik privatization plan but it was needed to expedite the overall privatization program for the current fiscal year.

"We have to sacrifice the economic value to accommodate public pressure, but we hope the privatization process after this (Semen Gresik) will be faster.

"From now on we have to disseminate more information about the privatization program to the public so that the people will be well informed," he added.

He also explained that the strategy for the privatization of state-owned public utilities PT Pelindo I and II (seaport management company), PT Angkasa Pura (airport management) and PT Jasa Marga (toll road operator) had been revised by only selling the business side, not the assets through a formula similar to the joint operating scheme adopted by state-owned telecommunications company PT Telkom.

"There will be not asset sales in these firms," he said, adding that such a strategy was needed to avoid a further public outcry against the privatization program. (rei)