SG wants govt to delay divestment

SG wants govt to delay divestment

President of state-owned cement producer PT Semen Gresik (SG)
Satrio said the government should postpone its plan to sell more
shares in the company to Mexico's cement giant Cemex SA, pending
a more conducive business environment.

Satrio wants the government to preserve the status quo
conditions, waiting for the local people of West Sumatra to calm
down.

"We hope the government will maintain the current conditions,
because the local people are not in their mood for such a plan,
especially during the general election... just let us work and
improve the company first," said Satrio.

Satrio feared that local people would disturb the company's
operations if the government decided to settle its dispute with
Cemex by agreeing to sell more shares in SG, which would turn the
foreign investor into a majority owner.

The East Java-based SG has two subsidiaries, PT Semen Padang
in West Sumatra and PT Semen Tonasa in South Sulawesi.

Currently, the government is preparing for litigation after
the Washington-based International Center for Settlement of
Investment Disputes registered a request for arbitration
submitted by Cemex, regarding a dispute involving its late-1998
acquisition of a 25.50 percent stake in SG.

The dispute between the government and Cemex centers
on the latter's failure to acquire a controlling stake in SG, as
stated in a 1998 agreement, which provided an option for Cemex to
increase its stake to 51 percent by the end of 2001 from the
current 25.50 percent stake.

The government could not deliver on its side of the deal due
to strong protest from Semen Padang. -- JP