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ublicly-listed engineering and construction company PT Wijaya Karya (Wika) has allocated up to Rp 35 billion (US$3.92 million) in this year’s investment budget to acquire asphalt miner PT Sarana Karya.

Wika corporate secretary Natal Argawan Pardede said in Jakarta on Friday that the acquisition price could be higher or lower, depending on the valuation of Sarana Karya, which is wholly owned by the government.

“We are still waiting for valuation of shares in Sarana Karya. We are preparing to acquire Sarana Karya and expect to finish the process in the first half of this year,” Natal said.

“We will finance the acquisition from cash reserves,” he added.

According to Natal, the acquisition funds had been included in this year’s capital expenditure of Rp 600 billion. Wika has allocated Rp 188.5 billion of total capital expenditure for investment spending, which includes acquisitions and funds for various construction projects in the country. The company will allocate another Rp 390 billion to develop its existing business and the remaining Rp 21.5 billion to maintain its assets.

Natal said that the acquisition of Sarana Karya would benefit Wika as the company wanted to add value to its business portfolio. Sarana Karya’s main asphalt mining site is in Pulau Buton, Southeast Sulawesi. The company also exports the asphalt to neighboring countries.

“Wika is seeking to develop its business into asphalt processing. The purchase of Sarana Karya will help us to fulfill this desire and will also be beneficial to our subsidiary concrete-casting business PT Wijaya Karya Beton,” Natal said.

Apart from Wijaya Karya Beton, Wika currently has several other subsidiaries; property developer PT Wijaya Karya Realty; auto parts, components and furniture exporter PT Wijaya Karya Intrade; construction company PT Wijaya Karya Bangunan Gedung; mechanical and electrical construction company PT Wijaya Karya Insan Pertiwi and geothermal company PT Wijaya Karya Jabar Power.

The acquisition is part of the government’s plan to restructure state-owned enterprises in Indonesia. Among state-owned companies asked to acquire other firms are PT Adhi Karya to acquire Perum Produksi Film Negara, PT Telekomunikasi Indonesia to acquire publishing company PT Pradnya Paramita after it merged with PT Balai Pustaka and PT Pembangunan Perumahan to acquire PT Industri Sandang Nusantara.

The State-owned Enterprises Ministry recently announced that it had appointed PT Perkebunan Nusantara III as the holding company to oversee other plantation companies in the country.

In an attempt to develop the asphalt business, Wijaya Karya also plan to build six asphalt extraction plants in Lawele, Buton, with a total production capacity of 300,000 tons per year. “We need to invest about Rp 250 billion in each plant, which have a capacity of 50,000 tons per year,” Natal said. (rcf)