Govt to get $287m from Gresik divestment

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)