Wika, Jasa Marga to Boost MNA Stake

The Jakarta Globe, Yohanes Obor, March 19, 2009

In an effort to get the stalled trans-Java toll road project back on track, state-owned construction company PT Wijaya Tbk, or Wika, announced on Tuesday that it planned to join PT Jasa Marga Tbk in increasing its stake in road contractor PT Marga Nujyasumo Agung, or MNA.

The firm has stumbled in its bid in to build the Rp 3.22 trillion ($270.5 million) Surabaya-Mojokerto portion of the road.

Jasa Marga said in February that it would start buying up concessionaires on the project, which will stretch from Jakarta’s Tanjung Priok Port to Tanjung Perak Port in Surabaya, East Java Province. The road had been expected to be operational in early 2009.

Government planners set aside Rp 2.8 trillion for land acquisition in 2007 and 2008 for the highway, which the Danareksa Research Institute said would increase the country’s gross domestic product by 0.2 percent for every 100 kilometers completed, adding more than 750,000 jobs to the economy.

MNA, which previously was majority owned by the Moeladi family, was scheduled to begin construction on its 36 kilometers of highway linking Surabaya and Mojokerto, also in East Java, in 2011, but was unable to start the project after investors pulled out.

Wika has now said it expected to buy 20 percent of MNA in two tranches, according to Imam Sudiyono, Wika’s corporate secretary. In the first, the company has signed a sale-and-purchase agreement with the Moeladi family buying 33.3 million shares worth Rp 33.3 billion and 20 million treasury stocks worth Rp 20 billion. It will then buy another 20 million shares worth Rp 20 billion from the Moeladi’s and 46.7 million shares worth Rp 46.7 billion from company’s treasury stocks in April, Imam said.

Jasa Marga in January swelled its stake in MNA to 55 percent, Imam said, leaving the Moeladi’s with 25 percent of the company. Jasa Marga also plans to expand its ownership in three local firms that received concessions for Jakarta’s outer ring road projects, along with one holding a concession on the East Java toll route, for Rp 1.74 trillion.

The firm said it would finance its share purchases through internal cash and the proceeds of its initial public offering, as well as tapping the government’s revolving fund for land acquisition.