State-owned contractors: HK-WSKT merger initiates consolidation among construction SOEs
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Kontraktor pelat merah: Merger HK-WSKT awali konsolidasi BUMN karya
18 November 2024
Bisnis, Jakarta – The government is steadily advancing its plan to merge seven state-owned construction enterprises (SOEs) into three main entities. This is part of the effort to restructure state-owned construction companies. The transfer of shares will begin with the construction SOEs that have the largest assets.
In this regard, PT Hutama Karya (Persero), also known as HK, and PT Waskita Karya (Persero) Tbk (WSKT) will be the first entities to be consolidated.
SOE Deputy Minister Kartika Wirjoatmodjo stated that the SOE Ministry is still finalising the government regulation to transfer government shares from WSKT to Hutama Karya.
At present, the restructuring process of Waskita Karya with the bondholders is ongoing. WSKT is expected to become a subsidiary of Hutama Karya soon.
"So, it will be maintained. Hutama Karya is in a very healthy condition, and the Trans-Sumatra Toll Road is progressing excellently. Therefore, after the restructuring, Waskita is expected to be supported by Hutama Karya," he said after a coordination meeting with the Public Works Ministry on Friday (15/11).
Kartika mentioned that, through the transfer of government shares, Hutama Karya would be able to sustain the cashflow of WSKT as its subsidiary. Consequently, WSKT can secure new contracts from several projects currently being undertaken by Hutama Karya, such as the numerous projects along the Trans-Sumatra Toll Road.
The government owns 75.34%, or 21.7 billion shares, of WSKT. The transfer of these shares will take place after the restructuring of WSKT.
Previously, WSKT had revised its debt master restructuring agreement (MRA) with banking creditors, amounting to Rp26.3 trillion.
Waskita Karya President Director Muhammad Hanugroho stated that 100% of the banking creditors have agreed to the new restructuring plan. In total, 21 creditors have agreed to the restructuring.
"With this [restructuring] process, we have gained complete trust to enhance our sustainability," he said at a press conference on Friday (6/9) in Jakarta.
On the other hand, Hutama Karya Corporate Secretary Executive Vice President (EVP) Adjib Al Hakim stated that the company is still awaiting an official policy from the SOE Ministry, as a Series A shareholder, to proceed with the merger of WSKT.
"Regarding the plan, Hutama Karya is still waiting for an official policy from the SOE Ministry as a shareholder," he told Bisnis on Monday (9/9).
Coordination
At present, the SOE Ministry is continuously developing the scheme to consolidate construction SOEs in collaboration with the Public Works Ministry. The merger plan for construction SOEs is part of the restructuring programme for this business group.
The government plans to merge seven construction SOEs into three entities. The seven construction SOEs involved in the project are HK, WSKT, PT Adhi Karya (Persero) Tbk (ADHI), PT PP (Persero) Tbk (PTPP), PT Wijaya Karya (Persero) Tbk (WIKA), PT Brantas Abipraya (Persero), and PT Nindya Karya (Persero).
If the process goes smoothly, the total assets of the seven construction SOEs will reach Rp443.38 trillion, based on data from late 2023. For comparison, this amount is larger than the assets of the Indonesian mining SOE holding, MIND ID, which are valued at Rp259.81 trillion.
"We have explained that the seven SOEs will be under three parent entities. So, we will only restructure some of them," Erick said during the occasion.
The SOE Minister assures that the merger of construction SOEs will not disrupt the tasks assigned by the government. He further stated that the merger would expedite the construction of projects.
"Yesterday, Deputy Minister Tiko and our team worked hard to ensure that the construction SOEs are healthy and efficient," Erick stated.
ADHI will be the parent holding company for Brantas and Nindya, while Waskita will be merged with Hutama Karya. Meanwhile, PTPP will be paired with WIKA. The merger is expected to enable the seven state-owned construction companies to operate in line with their specialisations.
For instance, Hutama Karya and Waskita specialise in the toll road sector. Additionally, based on the explanation by the SOE Ministry during a meeting with the House of Representatives (DPR) Commission VI some time ago, both companies have been instructed to work on non-toll road projects, institutional buildings, and commercial residential developments.
Meanwhile, WIKA and PTPP will focus on seaports, airports, EPC projects, and residential developments. ADHI, Nindya Karya, and Brantas Abipraya will specialise in the construction of the water sector, railways, railway tracks, and other sectors.
In terms of assets, the construction SOE with the largest assets is Hutama Karya, with Rp169.73 trillion throughout 2023. This represents an increase of 8.59% year-on-year (YoY) from Rp156.31 trillion in 2022.
Hutama Karya is followed closely by Waskita. WSKT holds assets of Rp95.6 trillion in 2023, which represents a decrease of 2.68% YoY.
Next, Wijaya Karya has assets amounting to Rp65.98 trillion, followed by PP, which recorded assets of Rp56.53 trillion.
Meanwhile, Adhi Karya has assets of Rp40.49 trillion, Brantas Abipraya has Rp9.27 trillion, and Nindya Karya has Rp6.05 trillion.
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