Govt to get $287m from Gresik divestment

JAKARTA (JP): The government is likely to receive more than US$287 million in cash next month from the sale of 35 percent of state-owned PT Semen Gresik.

The price bids from three new bidders, Germany's Heilderberger Zement AG, Switzerland's Holderbank and Laferge Asia Pacific of France, are certain to top the $287 million offered by Mexico's Cemex SA de CV in the first bidding stage, according to the a deputy of the state minister for the empowerment of state enterprises, Sofyan Djalil.

He said the government's divestment proceeds would also likely be received sooner than expected since the new bidders might submit their proposals before the August 19 deadline for the second bidding stage.

"The three contenders have said they will submit their proposals and they may even deliver the proposals before August 19," he said yesterday following a seminar on the country's privatization program.

Cemex SA de CV won the first bidding stage to purchase more than half of the government's 65 percent stake in Gresik by offering $287 million or $1.38 per share, beating Germany's Heilderberger Zement AG and Switzerland's Holderbank in the process.

"Cemex is now the preferred winner, meaning that the bidders in the second stage have to offer a higher price to beat Cemex," Sofyan said.

Heilderberger and Holderbank, in addition to Laferge, will try their luck again in the second bidding.

Sofyan added, however, that Cemex would be given the opportunity to increase its offer to top any new bids within five days after the completion of the second stage.

The winner of the Gresik privatization deal will be given the opportunity to increase its stake to more than 50 percent through a tender offer on the local bourse, he said.

Gresik is the first state-owned company to be privatized in the 1998/1999 fiscal year ending in March. The privatization effort is expected to raise Rp 15 trillion ($1.5 billion at an exchange rate of Rp 10,000 per dollar) to help finance the state budget, which is currently heavily burdened by huge subsidy commitments to help the poor survive the economic crisis.

Sofyan said 12 state-owned companies were ready to be privatized, but that the government might only privatize two or three companies if it was enough to meet the $1.5 billion target.

"The target in the current fiscal year is $1.5 billion, which may come from the sale of two or three companies."

When asked to confirm rumors that publicly listed mining operation PT Aneka Tambang (Antam) would be the next to be privatized, he said: "It's not yet a certainty. The criteria is the readiness of the company."

He explained that although 12 companies were ready for sale, there were still various problems to be settled first.

He pointed out that domestic telecommunications operator PT Telkom, for instance, had yet to settle problems in its joint operation projects (KSO) with five international telecommunications giants before being further divested.

"The KSOs will be restructured," he said, pointing out that one of the difficulties was the inability of the five international telecommunications giants to deliver a targeted 2 million fixed lines due to the country's year-long economic crisis.

He said the government had yet to decide on a strategy on Antam to achieve the best value in privatizing the mining company.

One consideration being studied is to merge Antam with two other mining companies, PT Tambang Timah and PT Bukit Asam Batubara, before proceeding with the privatization, he said.

Criticism

The country's privatization program has received widespread criticism, causing a delay in obtaining proceeds from sales. According to Director General of the State Budget Darsyah, part of the $1.5 billion should have already been received by June.

The latest criticism came from the head of the Development Finance Comptroller (BPKP), Soedarjono, yesterday when he called on the government to cancel its plans to sell state-owned companies. He argued that foreign majority ownership would threaten national interests.

"I think the government is being too hasty in implementing the privatization program without first making a clear concept about the program and the strategic role of the state companies in the country's politics," he said.

He pointed out that when the country faced a severe shortage of cement three years ago, there was nothing the government could do despite its 65 percent control in Gresik, the country's largest cement maker.

"What will happen if foreigners control Gresik?," he asked.

He also pointed out that the past policy of having the private sector control the cooking oil industry was badly affecting the country now.

"None of the private companies are now willingly to end the current cooking oil crisis," he said.

"As the man most responsible for auditing state companies, I have not seen any clear concept in the privatization program," Soedarjono said.

He stressed that raising money to finance the budget could also come from other sources.

"Based on my experience, I believe that a larger tax revenue can be obtained," he said, declining to give any figure. (rei)