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No approval yet on Pertamina'€™s plan to acquire PGN: Dahlan

Although the acquisition of state gas distribution company Perusahaan Gas Negara (PGN) by state-owned oil and gas company Pertamina would create more efficient gas distribution in the country, the government had not yet given the thumbs-up to the acquisition plan, State-Owned Enterprises Minister Dahlan Iskan said

Anggi M. Lubis (The Jakarta Post)
Jakarta
Fri, January 17, 2014

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No approval yet on Pertamina'€™s plan to acquire PGN: Dahlan

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lthough the acquisition of state gas distribution company Perusahaan Gas Negara (PGN) by state-owned oil and gas company Pertamina would create more efficient gas distribution in the country, the government had not yet given the thumbs-up to the acquisition plan, State-Owned Enterprises Minister Dahlan Iskan said.

Speaking Thursday at a press conference at his office to clarify the controversy over Pertamina'€™s proposed acquisition of PGN, Dahlan said his office had not yet given approval on the plan.

'€œThis acquisition is important for us to support our plan to build pipelines to distribute gas to households in major cities across the country '€” reducing our dependency on gas canisters '€” and to simplify gas distribution,'€ Dahlan said.

The controversy began last week when newspapers published the minutes of a meeting between Dahlan and Pertamina executives on the latter'€™s proposal to acquire PGN.

According to the leaked document, Pertamina proposed to acquire a majority stake in PGN by merging its gas unit, Pertamina Gas (Pertagas), with the publicly listed gas distribution company. If the transaction goes ahead, Pertamina would control a 30 percent stake in PGN. The minutes indicated that Dahlan had approved the proposal.

The media reports annoyed Coordinating Economic Minister Hatta Rajasa, who said that Dahlan had not informed him about the plan. According to Hatta, such a major proposal should have been consulted with him first as it also involved the public, who partly owns PGN.

Pertamina'€™s interest in acquiring PGN was unveiled following the implementation of a regulation providing open access to existing gas pipelines. PGN, which owns most of the country'€™s pipelines, opposed the regulation, dashing Pertamina'€™s hopes of sharing PGN'€™s pipelines to distribute its gas.

Dahlan said the meeting was actually a third one '€” not the final meeting '€” to discuss the acquisition plan. He said that journalists had only obtained a document containing Pertamina'€™s proposal, and moreover had mistakenly translated the unapproved proposal as the government'€™s blessing for the merger.

'€œIt was merely a document from our meeting with Pertamina, which was not attended by PGN'€™s board of directors. We have already planned another meeting at PGN headquarters, which will not be attended by any Pertamina directors,'€ he said.

Dahlan maintained that as the acquisition would automatically end the conflict regarding the open access policy, gas distribution would become more efficient.

He said the government had appointed state-owned investment firms Bahana Securities and PT Danareksa to assess the acquisition plan. Dahlan added that further details '€” such as how much money was needed for the acquisition and how the two firms'€™ shares would be diluted '€” would only be announced after the assessment had been completed.

Currently, the government holds 57 percent of PGN shares, while the public holds the remaining 43 percent.

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