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T Rukun Raharja (RAJA), a listed liquefied petroleum gas distributor, plans to acquire 51 percent of gas and fuel distributor PT Perusahaan Daerah Pertambangan dan Energi Gas (PDPDE) in a move to expand the business and win over market competition.

PT PDPDE was jointly established in 2009 by PD Pertambangan dan Energi Gas Propinsi Sumsel, which owns a 15 percent stake in the company, and PT Dika Karya Lintas Nusa, which has an 85 percent stake in the company.

Besides distributing gas and fuel, PDPDE exports and imports liquid petroleum gas (LPG) and is a buyer of geothermal energy.

“The management of the company [RAJA] has decided to concentrate on the energy supply sector, especially with regards to gas distribution, and hence, has decided to acquire 51 percent of [Dika Karya’s] share in PDPDE Gas,” KJPP Rao, Yuhal & Partners, the advisory firm appointed by RAJA, wrote in a report.

The report added that RAJA saw promise in the gas and mineral sector given that the continued expansion of the Indonesian economy has sparked a demand for energy.

Gas consumption in Indonesia has mainly risen in the past five years. Gas consumption in 2007 stood at 31.3 million cubic meters, but in 2010, consumption increased by 27.7 percent to 40.3 million cubic meters.

However, consumption dipped slightly by 5.9 percent to 37.9 billion cubic meters in 2011.

The report added that RAJA would acquire the 51 percent stake through its subsidiary, PT Panji Raya Alamindo (PRA).

PRA would shell out Rp 27.28 billion to buy the shares, the report said.

RAJA plans to fund the purchase using internal cash and bank loans, the report added.

The company earned revenues of Rp 434.5 billion as of June 2012, a 10.3 percent increase from the Rp 393.9 billion earned during the same period in the previous year. Gross profit was at Rp 111.4 billion by the second quarter of 2012, or 13.5 percent than the Rp 98.1 billion gained in the same period in 2011.

Meanwhile, PDPDE saw revenues of Rp 105.2 billion by June, a 392 percent increase compared to the same period in the previous year, during which revenues measured Rp 21.3 billion. The company’s gross profits in the first half of the year stood at Rp 28.7 billion, or a 401 percent increase from the Rp 5.7 billion gained in the same period during the previous year.