Servo to sell S. Sumatra coal road to Titan Group

Servo Group is currently in talks with the well-diversified Titan Group to sell its 116 km coal road project in South Sumatra as the project suffers financial difficulties amid the lingering downturn in the global coal market.

Danke Drajat, Corporate Secretary of PT Servo Lintas Raya, Servo Group subsidiary which develops the coal road, was quoted by Bisnis Indonesia daily as saying Friday that the company has already dimissed 80 percent of its employees.

He added that Servo plans to sell the project to the Titan Group, which also operates in the coal mining sector. The latter is currently conducting a due diligence process.

Servo started building the coal road, linking Muara Enim and Prabumulih, in 2009 with the initial target of completing the project in 2011. The company missed the deadline, and completed it in 2012.

Danke, however, said coal miners in South Sumatra have never used the special coal road since its completion as many miners have suspended production amid the global coal market downturn, causing Servo to suffer cash flow problem. So far, only Servo units have used the road. The group claimed it has already spent Rp 1 trillion to develop the road. (*)