Semen Gresik reshuffle set for Feb. 26

Berni K. Moestafa, The Jakarta Post, Jakarta

Publicly listed state cement company PT Semen Gresik is set to hold an extraordinary shareholders meeting on Feb. 26, with the main agenda to reshuffle its current boards of directors and commissioners.

The reshuffle of Gresik's top management comes on the heels of mounting protests within the firm against a government plan to sell off a 51 percent stake to Mexico's Cemex SA de CV.

"The shareholders meeting will be on Feb. 26," said a source at Cemex, which already owns a 25 percent stake in Semen Gresik.

Talks of an imminent reshuffle at Semen Gresik have surfaced in the local media, with State Minister of State Enterprises Laksamana Sukardi saying he was mulling over the idea.

In a letter to Semen Gresik, he demanded an immediate extraordinary shareholders meeting to replace Semen Gresik's top management and appoint an independent board of commissioners.

The letter, a copy of which was obtained by The Jakarta Post, was signed by Laksamana on Jan. 21.

Laksamana's deputy for privatization, Muhammad Yasin, was unable to confirm the reshuffle when contacted by the Post.

Neither Semen Gresik nor Cemex officials were available for comment.

Efforts to sell Semen Gresik came to a grinding halt last December amid fierce protests from the company and its units, PT Semen Padang and PT Semen Tonasa.

Under a put option deal with Cemex, the government planned to divest its 51 percent stake in Semen Gresik for some Rp 520 trillion (about US$5 billion).

The proceeds should have helped cover a gapping state budget deficit.

But employees at the three companies demanded the government cancel the deal, arguing the cement company was too vital to fall into foreign hands.

Semen Gresik is the country's largest cement producer, thanks to its total annual production capacity of 17.25 million metric tons.

Some analysts alleged that resistance to privatization stemmed from management fears of losing business contracts with local cement distributors. Individuals within the firms benefit from contracts which mark up the distribution costs, they said.

Last December, a Romanian privatization expert and chief economic advisor to the Romanian government, Petrisor Gabriel Pieu, suggested the government simply reshuffle the management of state companies that do not support privatization.

He said that with a new board of management that was committed to privatization, employees would be hard-pressed to continue protesting.