Minister wants quick answers to PGN share-price debacle

The Jakarta Post, Jakarta

Finance Minister Sri Mulyani Indrawati has instructed the Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK) to speed up the ongoing probe into the sudden collapse in the price of shares in state-owned gas firm PT Perusahaan Gas Negara (PGN).

"The finance minister wants the investigation into the case to be wrapped up quickly. The case is very sensitive and could damage the market," Jakarta Stock Exchange president director Erry Firmansyah said Friday.

No specific timetable has been set for the investigation, but Erry said he hoped it would take less than two weeks. "I want it to be completed as expeditiously as possible," he said.

PGN's shares fell 23.3 percent at one point earlier this month, prompting the regulator to temporarily suspend trading in the company's shares.

PGN has said the unanticipated slump in its shares was due to the announcement of a six-month delay in the commencement of a gas pipeline project worth US$1.1 billion.

Because of the delay, the company had to revise down its gas output target for this year to 555 million standard cubic feet per day (mmscfd) from 787 mmscfd. The pipeline has the capacity to transport 1,000 mmscfd, and links South Sumatra and West Java.

The suspension of trading in PGN shares on the Jakarta Stock Exchange has now been lifted, but an investigation is underway to find out what really happened.

Bapepam said that besides PGN, it would also question 12 local and foreign-based brokers that are reported to have been involved in the case.

Erry said the JSX was ready to submit the relevant information to Bapepam, but stressed that it could not become involved in the investigation.

M.S. Hidayat, the chairman of the Indonesian Chamber of Commerce and Industry (Kadin), said the government must act firmly in handling the case so as to help improve the image of state firms.

"I think it is a warning to the government. I don't want to blame anybody, but the government must immediately take firm action as this case concerns a state-owned firm," he stressed.

He said state-owned firms had to improve their images and performances, and do what they had promised to do as regards projects and plans.

"The decline in PGN's share price was due to uncertainty," he said.