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By Moresi Ruahma'a

PORT MORESBY, Papua New Guinea (August 29, 2000 - The National/PINA Nius Online)---The Papua New Guinea Government has sold its interest in the Lae-based PNG Halla Cement Ltd (PNGHC) factory for US$ 8.5 million (K 22.6 million) to a Japanese cement company.

The sale of the state's interest in the cement factory marks the start of the government's privatization policy.

The move makes it the first business to be disposed of, Prime Minister Sir Mekere Morauta said when announcing its sale to Taiheiyo Cement of Japan.

The sale agreements were signed on Friday at Government House in Port Moresby.

"Today marks the beginning of the government's privatization policy. Privatizing is the key to restructuring our economy,'' Sir Mekere said.

He said any business that comes under the government's umbrella and is affected by the privatization process would be disposed of the same way.

"Time is not that important but we have to do the task properly,'' he said.

Sir Mekere commended Taiheiyo of Japan, saying the company has agreed to operate the cement manufacturing business without tariff protection and to eventually build up capacity to supply cement not only to the PNG market but also to the export market.

Halla Cement was established as a joint venture company for the purpose of implementing and managing the investment in the Lae Cement and Clinker project.

The state had 50 percent equity in the company while Halla Engineering and Heavy Industries of Korea held the other 50 percent.

As a joint venture project, Halla was initially granted - among other initiatives - tariff protection on imported cement, pioneer industry status, duty free importation of factory plant and machinery, spare parts, and raw material for the factory.

Government investment in the joint venture amounted to US$ 4 million in paid up capital and a 100 percent loan guarantee of US$ 31 million, financed by the Import-Export Bank of Korea.

Production of the cement began in 1993 with a projected output of 200,000 tons of cement a year, in anticipation of a ban on imported cement to supply major infrastructure projects and construction related to mining.

Over the years, however, the company did not perform well because of the depressed state of the country's economy and the devaluation of the kina.

For additional reports from The National, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/The National (Papua New Guinea).

Pacific Islands News Association (PINA) Website: 

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