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etroleum and chemical distributor PT AKR Corporindo (AKRA) is teaming up with state-owned port operator Pelindo III for the construction of an integrated port project called the Java Integrated Industrial and Post Estate, in Gresik, East Java.

Consisting of a port and an industrial estate, construction will take several phases.

AKR and Pelindo III have formed two joint ventures for the project, according to AKR chief financial officer Suresh Vembu.

For the port, AKR, through its subsidiary, PT Usaha Era Pratama Nusantara (UEPN), formed PT Berkah Manyar Sejahtera, in which UEPN and Pelindo hold 40 percent and 60 percent stakes, respectively.

Meanwhile, for the industrial estate, UEPN and Pelindo formed PT Berkah Kawasan Manyar Sejahtera. In the second joint venture, UEPN holds 60 percent ownership, while Pelindo controls the remaining 40 percent.

Suresh said that the project would be the first of its kind as it would have a deep sea port and an industrial estate with railway and toll road connections.

“Logistics are currently very expensive because most ports are located far from industrial estates. The Tanjung Priok Port is an example. It is far from Cikarang [industrial estate]. So besides ports, we would like to provide better logistic services for industries in the eastern part of Indonesia with Surabaya as the business hub,” he said during a telephone interview.

With a bigger capacity than most ports in East Java, the new port will be able to accommodate large vessels, such as bulk carriers and container ships, including energy-related vessels.

Both the port and industrial estate will be built simultaneously on a 2,500-hectare plot of land. The port will occupy 250 hectares of the land, while the industrial estate will take up about 2,000 hectares.

The first phase of construction will cost between Rp 7 trillion (US$719.57 million) and Rp 8 trillion, which includes land acquisition and infrastructure development, according to Suresh.

“We estimate that the first phase will be completed within three to four years,” he added.

Publicly listed AKR raised Rp 1.5 trillion from a bond issuance last December. About 35 percent of the funds, or Rp 525 billion, is being channeled to UEPN as loans to finance the port project.

Meanwhile, the company is planning to build more gas stations to support its distribution of subsidized fuel this year. Downstream oil and gas regulator BPH Migas appointed AKR, along with Surya Parna Niaga, to distribute fuel to areas outside of Java and Bali for 2013.

AKR will distribute 267,892 kiloliters of subsidized fuel, 160 percent higher than in 2012. It will open 16 new gas stations and expects to run up to 47 gas stations by May this year.

The company has allocated between Rp 350 billion and Rp 400 billion in capital expenditure (capex) funds for its existing business. The capex funds are generated from its internal cash.

Suresh said that based on its 2012 financial report, AKR saw its revenues climb 15.3 percent to reach Rp 21.67 trillion, while its net profits grew 4.9 percent to Rp 649.3 billion. Its petroleum and chemical distribution businesses were the two biggest contributors to revenue growth last year.

As of December 2012, AKR’s total assets reached Rp 11.79 trillion. Its liabilities amounted to Rp 7.75 trillion and its equities stood at Rp 4.04 trillion. The company’s shares closed at Rp 5,200 apiece on Monday, down 1.9 percent from a day before.