JAKARTA (Reuters) - China Communications Construction Co’s (601800.SS) Indonesian subsidiary will buy a stake in a company which won a contract to build a 170-km (106 miles) toll road in the southeast Asian country.
PT China Communications Construction Indonesia (CCCI) will pay 23.3 trillion rupiah ($1.65 billion) for a stake in PT Jasamarga Probolinggo Banyuwangi, a unit of Indonesian state-owned toll road operator Jasa Marga (JSMR.JK), Bambang Brodjonegoro, Indonesia’s planning minister said.
The Jasa Marga unit will build a toll road connecting the city of Probolinggo to Banyuwangi in the eastern side of the main Java island, Brodjonegoro’s presentation showed.
Jasa Marga, which currently controls 94% of the subsidiary, will aim to maintain at least a 51% stake in its unit, its director Adrian Priohutomo said, though he did not disclose how much capital the state firm would have to provide to maintain that level.
“When CCCI enters, we will maintain our majority, to what percent will depend on the result of the due diligence,” he said.
Priohutomo said the company is currently holding a tender for the construction of the first 30 km, aiming to break ground next year.
Minister Brodjonegoro also witnessed customised supply chain financing agreements between ICDX Logistik Berikat, a subsidiary of Indonesia’s commodity exchange, with state construction firm Wijaya Karya and Jasa Sarana, a construction company owned by the West Java government, worth a total of 6 trillion rupiah.
The planning ministry has been arranging infrastructure financing deals to reduce the state’s funding burden.
Reporting by Tabita Diela, editing by Louise Heavens; Writing by Gayatri Suroyo