Govt to sell remaining Gresik stake to Cemex

JAKARTA (JP): The government announced on Monday that it planned to divest its remaining 51 percent stake in publicly listed cement producer PT Semen Gresik to the Mexican-based PT Cemex Indonesia, a move that will net the government US$520 million.

State Minister of State Enterprises Laksamana Sukardi said pressure to raise revenue for the state budget required the government to push ahead with the sale of Semen Gresik.

"Semen Gresik's put option (deal) is one of the sources we will also use (to finance the budget)," Laksamana said during a press meeting that followed the signing of a new Letter of Intent (LoI) with the International Monetary Fund (IMF).

Under a put option agreement with Cemex, the government has the right to sell off its entire stake in Semen Gresik to Cemex for $520 million.

"It (the put option deal) will expire on Oct. 26 and we will have to give them (Cemex) 30 days prior notice so that they can prepare," Laksamana said.

In 1998, Cemex purchased a 14 percent stake in Semen Gresik, lured by the government's promise to allow it to become a majority shareholder in the state company.

Cemex then purchased another 11 percent through the stock market, raising its ownership to 25 percent.

Semen Gresik owns two subsidiaries, PT Semen Padang and PT Semen Tonasa, which were merged into the Semen Gresik Group in 1995.

Together, they have an annual production capacity of 18.2 million metric tons of cement, as compared to the country's total output of 45 million tons.

Cemex's efforts to control Semen Gresik faltered after protests against foreign ownership in Semen Padang from Padang people in West Sumatra.

Claiming that Semen Padang was built on their ancestors' land, the Padang people demanded the company be separated from Semen Gresik.

The government already showed signs of ignoring the put option deal, saying it was studying ways of compensating Cemex for the loss of Semen Padang.

The results of the study had never been made public.

"We'll turn our attention to resolving the internal problems that exist between Semen Padang and Cemex," Laksamana said without elaborating.

The government has targeted raising some Rp 6.5 trillion (about US$743.70 million) through the privatization of state firms this year.

With only four months remaining, and proceeds amounting to zero thus far, it has few options left to catch up on the target.

"This is about the interests of the nation ... I hope that they (the people of Padang) can understand that," Laksamana said.

A similar demand has also been aired by people in South Sulawesi, who wanted the government to spin-off Semen Tonasa from Semen Gresik.

South Sulawesi people, however, have taken a milder stance against foreign investors, saying that they would welcome Cemex investing in Semen Tonasa, but it must first be excluded from Semen Gresik. (bkm)