Dungsam to float shares once in operation
The Druk Holdings and Investment (DHI) shared its intention to welcome public to buy shares in Dungsam Cement Project and the recently commissioned Dungsam Polymers. The prospectus on divesting 49 percent shares from the polymer is being worked on.
Chief Executive Officer (CEO) of DHI, Karma Yonten said that in the past they have always mentioned that once Dungsam is complete, shares will be floated to the public.
“This is once again to reassure that shares will be floated we are just waiting for the completion of Dungsam,” he said during a press conference last week.
Further he also said that shares could have been floated much earlier before Dungsam was completed but then the public doesn’t benefit from it because in the construction phase, the shares that public hold would not get any returns whereas once construction is complete and starts manufacturing, shareholders at the end of the year are eligible for dividends.
“So that is what we are looking at from public perspective,” he said.
Dungsam requires money and it could use public’s money to finance some of its works that is going on. “But it is with that concern that we are holding off till we finish construction and after that we will be floating the shares,” he added saying that whatever the project DHI does, ultimately it belongs to the people so we feel that we should be divesting shares.
The Chairman of DHI, Lyonpo Om Pradhan added saying that it is DHI’s approach that where the private sector can undertake any investments, they are encouraged but where they cannot do it, DHI take up projects like Dungsam Cement Project.
If the returns are good, then DHI being responsible for promoting private sector will sell shares, he said. “It is easier for us to keep the shares because it will give us more revenues. But we have said that the Bhutanese public should also benefit for this so a certain percentage we will float to the public so that some benefits can be derived by people who buy the shares and we will also encourage the share markets in Bhutan,” added the chairman.
As far as project is concerned, the CEO of Dungsam Cement Authority Ltd pointed out several reasons for the delay. The problem of labor retention; the never ending strikes at the border owing to which labor and material movements are affected and also the delay in commissioning the works due to difficulty to mobilize service engineers and commissioning engineers were some of the reasons.
On the progress of the project so far he said that they were supposed to start production by December 2011. The deadline was shifted to March, again to fail. So it was decided that clinkers would be sold by July till the cement production. By October the cement will be produced.
Owing to strikes, the CEO said that they are not confident to start producing clinkers by July which would spill over to August. The upcoming board meeting is to review and come to a conclusion whether the production of clinkers would be by mid or end of August, he said.
“In October we are confident that we can produce cement,” added the CEO.