"There is no final statement from the government about its agreement to the acquisition. The government only agreed to carry out evaluations to study the best option," stated Finance Deputy Minister Bambang Brodjonegoro on Friday.
It was earlier reported that the government had agreed to PT Pertaminas plan to acquire PT PGN, asking the state-owned oil and gas company to present an evaluation on its corporate action plan.
It was actually an agreement to conduct an evaluation of Pertaminas acquisition plan, which was decided upon during a meeting between State-owned Enterprise Minister Dahlan Iskan and the Board of Directors and Commissioners of Pertamina, early this month.
If the government finally agrees to the acquisition, will Pertamina benefit from the corporate action?
Director of Public Policy Study Center (Puskepi) Sofyano Zakaria explained that as both companies were state-owned, it was better for PGN to be acquired by Pertamina rather than by a foreign company. It will have positive impacts on PGN rather than having its stake controlled by a foreign firm.
Foreign capital is a threat to the existence of a state company. So, a merger between Pertamina and PGN will potentially remove public concerns from the threat. After all, the downstream gas sector will develop rapidly if it is merged with Pertamina because Pertamina has controlled the upstream gas sector. This will benefit PGN, according to Zakaria.
The acquisition will also accelerate the fuel-to-gas conversion program because Pertamina has the largest refueling station (SBPU) outlets across the country. "This is a big business opportunity for PGN," he stated.
Therefore, according to the Puskepi director, the government should merge state-owned firms Pertamina and PGN so that gas business for the interest of the people will not be taken for granted.
Zakaria pointed out that the public now harbored doubts that companies such as PGN whose business was related to the interest of people will ultimately fall in the hands of foreign companies.
"The strong desire of Pertamina to acquire PGN can eliminate the peoples concern of the possibility of a state firm to fall into foreign capital. PGN should also understand this," Zakaria stressed.
In the meantime, energy observer Fahmy Radhi of the University of Gajah Mada (UGM) opined that the acquisition of state gas distributor firm PGN by state-owned oil and gas company Pertamina will increase Pertaminas corporate burden.
"The acquisition of PGN by Pertamina will drive down PGN share prices. PNGs share prices have been fluctuating in the past one month due to negative sentiments over Pertminas plan to acquire it," Fahmy pointed out.
The price fluctuation is proof of the market rejection of the acquisition, he commented. "This is triggered by the governments gas liberalization policy."
He added that through the energy and mineral resources ministers decree No. 19/2009, the government allowed business players to take part in natural gas transportation and commercial activities, allowing them to compete through an open access scheme.
Fahmy stated that if its reason to acquire PGN is the desire to apply the open access scheme, then Pertamina will not gain significant benefit from the acquisition. It will even put further burden on Pertamina which already has many business lines.
Regarding Fahmys fear of the fall of PGN share price if acquired by Pertamina, State-Owned Enterprises Minister Dahlan Iskan believes that the share price of PGN in the capital market will not be affected too much.
"I think the price of its shares will adversely increase if the state-owned gas distributor firm is acquired by Pertamina," the minister stated last Friday.
He explained that in general, capital market players shared different opinions from those of the public. "Capital markets have price fluctuation characteristics. Prices are always rising and falling. But, capital market players always feel that the share prices will continue to increase if the company has good fundamentals," the minister added.
Therefore, Dahlan noted that he did not believe the price of PT PGNs shares will fall.
"The corporate action will not reduce the value and volume of the shares owned by the shareholders of both the companies," he remarked.
However, the government has not yet finally decided to merge the two state-owned companies. Finance Deputy Minister Bambang Brodjonegoro stated on Sunday that the government still needed to study the plan further.
"There is no statement saying that the government has decided to let the Pertamina acquire it. We only request it to study the best option. The option to be taken could be merger or status quo," Brodjonegoro pointed out.
The deputy minister added that the acquisition plan emerged after PGN faced difficulties in obtaining access to upstream gas sector. Now, no one option has been agreed upon together with regard to the merger plan.
"Pertamina controls the upstream area and it can also make business in the downstream sector. But basically no action has been taken yet. We will find the best option. It is not uncommon for a state-owned company to have two subsidiaries doing business in the same area," remarked the deputy minister, referring to Pertagas, a subsidiary of Pertamina which has also been doing business in the distribution of gas.
Therefore, the government is carefully the plan carefully before the two state firms could be merged.
For this purpose, the government appointed securities companies, PT Bahana Securities and PT Danareksa Sekuritas, to evaluate the merger plan.
"Both Bahana and Danareksa will weigh the various options for the planned merger and suggest an action plan for the state-owned oil and gas company Pertamina and state gas firm PGN," State Enterprises Minister Dahlan Iskan noted.
There are two options with regard to the plan of PGN acquisition by PT Pertamina. The first option has two stages. In the first stage, PT PGN will buy PT Pertagas, which is a subsidiary of PT Pertamina, and in the second stage PT Pertamina will purchase PT PGN.
The second option is that PT Pertamina will directly purchase PT PGN in a single step.
The corporate action plan surfaced after Pertamina and PGN had bid to acquire one another.
On Sunday (Jan. 12), a number of national newspapers reported the summary of a meeting attended by Dahlan Iskan, the officials of the State Enterprises Ministry, and Pertaminas board of directors and commissioners.
(A014/INE/o001)
EDITED BY INE
(A014/KR-BSR/O001)
Reporter: Andi Abdussalam
Editor: Jafar M Sidik
Copyright © ANTARA 2014
