Rukun Raharja (2014)

Background
First lited on the IDX in 1993, PT Rukun Raharja Tbk (RAJA) originally operated primarily as port logistics company; this was seen by its initial 99% shares acquisition of PT Sarana Timur Nusantara (PT CSN) a port services company that specializes in landing craft tanks, tug boats, and barges.

By 2010, RAJA started its conversion from port logistics to the gas sector through the acquisition of PT Panji Raya Alamindo (PT PRA) and PT Triguna Internusa Pratama (PT TIP), an LPG/LNG distribution services, and a gas pipeline related company respectively. Furthermore, PT Trimitra Cipta Mandiri (PT TCM), a gas transmission company, was also acquired by RAJA in 2011. By 2012, RAJA has continued its involvement in the gas sector by acquiring PT PDPDE, a company also related in the gas industry and one that could reinforce RAJA’s standing in the gas sector.

Current
Currently, RAJA has a new set of commissioners that is believed to be the perfect men to lead RAJA to meet their future goals. The first person is Rudiantara, who is the newly appointed (June 11, 2014) President Commissioner of RAJA. Rudiantara has previously worked with PLN, the national electricity provider, which makes him an experienced player in the energy market, a market that RAJA wants to become an active player in.

The next commissioner is Rachmat Gobel, he has been involved with Panasonic and is the head of relations between Indonesia and Japan. As Gobel is a prominent figure in Japan, he can help facilitate trade of machines and products between Indonesia and Japan, making the process more smooth for RAJA.

Currently, RAJA has three main subsidiaries, PT PRA, PT TIP, and PT CSN. The first two subsidiaries are directly related in gas distribution and has subsidiaries of their own in the form of PT PDPDE and PT Energasindo Heksa Karya (PT EHK) which are under PT PRA (primarily used as a holding company), and PT TCM which is under PT TIP. The last subsidiary is PT CSN, which is not related to gas distribution and is inted to be divested in the upcoming years.

PT EHK, operates in both West Java and Jambi (Sumatera), in the West Java operation, PT EHK has 83km aggregate pipeline length in which it has a 77 MMSCFD capacity limit. With that said, only 18% or 13.9MMSCFD of the maximum capacity is currently being used. Similarly, in the Jambi operation, only 28.5% or 17.1 MMSCFD out of a maximum of 60 MMSCFD is being utilized through out the 35km pipeline.

PT PDPDE also operates in Jambi, it has 52km of pipeline in the area and has a maximum capacity of 30 MMSCFD, similar to PT EHK’s pipelines, only a small fraction of the pipeline’s capacity is being used, more specifically only about 33% or 10 MMSCFD is being utilized.

PT TIP currently operates in two types of gas trades, transmission and compression. The transmission service is in Tambun and has 35km of pipeline to support the business; the pipeline has a 20 MMSCFD maximum per day and in 2013, a total of 4,238 MMSCF was trasmitted through the pipeline, or 11.6 MMSCFD which is approximately 58% of the pipeline capacity.

PT TCM operates in three locations, Cilegon, Bitung, and Jambi. In Cilegon and Bitung lies the transmission services, and is supported by 7.5km of pipeline with a maximum capacity of 7.5 MMSCFD. This pipeline uses 64% of its maximum capacity, transmitting 4.8 MMSCFD. In the Jambi location, TCM serves as an operation and mantanence company that provides its services to PT EHK and PT PDPDE.

Future
RAJA is planning to become an integral player in the gas industry in the coming years, evidence of this can be found by the divestment of PT CSN, a shipping logistics company, and investing in favor of gas related companies in recent years. Currently, RAJA’s pipelines in all of their operations are not performing at 100% which gives RAJA a good advantage in the form of increasing output without injecting more capital. At the end of the year, RAJA has estimated that the EHK Jambi, EHK West Java, PDPDE pipelines will all have increased the amount of gas distributed.

EHK Jambi is estimated to increase from 17.1 MMSCFD to 37.6 MMSCFD due to an increase of supply from Conocophillips of 26 MMSCFD, continuing to 2015, an estimated 44 MMSCFD is to be distributed through the Jambi pipeline. EHK West Java is estimated to increase from 13.9 MMSCFD to 15 MMSCFD, and PDPDE is expected to increase from 10 MMSCFD to 13 MMSCFD; additionally, it is expected that the PDPDE pipeline will increase by 2 MMSCFD by the end of 2015.

In addition to increasing the volume of gas distributed, RAJA has an upcoming project that involves Gresik, East Java. The project is estimated to cost USD20m and would start on January 15, 2015 and is expected to finish by September 2015. The pipeline is expected to transmit 15 MMSCFD of gas to PLN and grow to 50 MMSCFD in three years time.

Furthermore, RAJA has planned further developments in Jambi, Karawang, Semarang, Balikpapan, Teluk Lambong, and Bali starting from 2015 onwards. All the projects involve the gas sector with distribution, CNG processing, and building an LNG regasification plant being the main services focused on. These projects will cost approximately USD115m to complete.