Pupuk Kaltim to go it alone ahead of IPO

JAKARTA (JP): State fertilizer firm PT Pupuk Kalimantan Timur (Pupuk Kaltim) hopes to divorce itself from its holding company PT Pupuk Sriwijaya (Pusri) ahead of its plan to go public in May, its president Syaiful Amir said on Tuesday.

"We expect the goverment to reach a decision in March," Syaiful told reporters on the sidelines of a hearing with the House of Representatives.

The Ministry of Finance was currently studying the recommendations by consultant company PricewaterhouseCoopers (PwC) to turn Pupuk Kaltim into an independent company.

Pupuk Kaltim is one of eight state companies earmarked for privatization this year. The government hopes to raise Rp 6.5 trillion ($684 million) through the sales of state enterprises to plug a huge deficit in its budget.

The company, which operates near the natural gas field in Bontang, East Kalimantan, became a subsidiary of Pusri in 1997 when the government handed over all its equity holding to the holding company.

Syaiful was one of five presidents of state fertilizer companies taking part in a hearing with the House's Commission IX on state finance.

"The consultant (PwC) suggested the company conduct immediate spin-off before entering the capital market," Syaiful said

If approved, control over Pupuk Kaltim would once again rest with the government as it prepared for its initial public offering (IPO) at the Jakarta Stock Exchange, he said.

The company hoped to float 49 percent of its equity, he added.

"We have completed our preparation (for the IPO)," Syaiful said, adding that Pupuk Kaltim had appointed PT Danareksa and PT Trimegah Securities as underwriters for the public offering.

Pupuk Kaltim was currently negotiating with the government over a 10-year deal to purchase natural gas from state oil and gas company Pertamina to replace the existing three-yearly contracts, he said.

According to a November 1997 document of Pertamina, Pupuk Kaltim paid US$1 per million British thermal units for the gas, far lower than what other companies were paying.

Pupuk Kaltim will inaugurate its sixth plant in Bontang in May which is expected to bolster its production capacity 2.5 million tons to 3 million tons.

In 2000, its output of 2.4 million accounted for about 40 percent of Indonesia's total fertilizer production of 6.3 million tons. (03)