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Adhi Karya looks to waste management for growth
Construction firm Adhi Karya is keen to diversify its operations into waste management, particularly waste produced from oil and gas blocks, with the state-owned company seeing the market as a promising source of future growth
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onstruction firm Adhi Karya is keen to diversify its operations into waste management, particularly waste produced from oil and gas blocks, with the state-owned company seeing the market as a promising source of future growth.
The company is also looking into clean water facility development as part of its business diversification efforts.
The opportunities in waste management are enormous given the fact that several oil and gas concessions have recently ended, or will end soon. These oil and gas companies have post-mining obligations to ensure their areas of operation recover from environmental damage.
“As you know, Chevron’s concession area will end in 2018, Mahakam Block ended in 2017. Others, including [the concession areas of] PetroChina, Conoco Phillips and British Petroleum will expire between 2022 and 2023,” said Budi Saddewa Soediro, Adhi Karya’s operational director I recently.
Budi said there were about 800 contaminated areas, covering approximately 170 square kilometers, with an identified volume of 7 to 8 million cubic meters.
“The overall potential is Rp 176 trillion [US$12,77 billion]. Our hope is to be able to get into these projects,” he added.
Another new business that Adhi Karya aims to explore is the supply of clean water, with a total project cost of Rp 4 trillion. For the project, it planned to collaborate with an investor from South Korea, Adhi Karya president director Budi Harto said.
The clean water would be sourced from a dam in Banten, to supply industries as well as the general public in South Tangerang and Jakarta areas, he added.
The firm hopes that these two businesses can earn the company added revenue, in addition to its main business line as a contractor.
Adhi Karya is aiming to increase in net profit by 77 percent to Rp 925 billion in 2018 from the Rp 515.42 billion it booked in 2017.
From its construction business, as of March this year, the company had booked Rp 3 trillion in new contracts, up 78.6 percent compared to February.
The contribution of the new contracts was dominated by construction and energy projects with 87.3 percent and property with 10 percent, with the remainder coming from other sectors.
In 2018, Adhi Karya will concentrate on building the Jakarta-Bogor-Depok-Bekasi (Jabodebek) light rapid transit (LRT) — a major project costing a total of Rp 22.8 trillion — so that it is completed to schedule by 2019.
Phase I of the LRT Jabodebek project has reached 36.3 percent completion, which the company claimed was ahead of schedule.
By section, the Cawang-Cibubur route has reached 58.4 percent completion, the Cawang-Kuningan-Dukuh route 20 percent and the Cawang-Bekasi Timur route 32 percent.
LRT Jabodebek, which will span 44.43 kilometers, is intended to reduce traffic congestion in areas surrounding the capital city such as Bogor, Depok and Bekasi.
After its shareholder’s meeting on Friday, the firm announced a dividend payment of Rp 103 billion, or 20 percent of its net profit from last year. The dividend was equivalent to Rp 29.45 per share.
The company also reshuffled its board of directors last week. Harris Gunawan, the former finance director, has moved to another state-owned company, Waskita Karya. He was replaced by Entus Asnawi Mukhson.
Two directors joined the company, namely Agus Karianto as human resources director and Partha Sarathi, who will serve as a quality, health, safety and environment director.
