Gas prices for fertilizer producers to be set at $1.30/MMBTU
Friday, November 24 2000 - 02:00 AM WIB
The government is likely to set natural gas prices for fertilizer producers at USS$1.30 per million British Thermal Units (MMBTU) by the end of this year, according to the president of state fertilizer plant PT Pupuk Sriwijaya (Pusri), Suhadi.
Suhadi noted that inter-departmental meetings to set guidelines on the implementation of Domestic Gas Incentives had come to prices of US$1.20 to $1.30 per MMBTU of gas for fertilizer producers.
"Based on information we get, this new gas prices will be announced soon, possibly before the end of this year," Suhadi said after a hearing between Pusri and the House of Representatives' Commission V on Thursday.
The director of chemical industries at the Ministry of Industry and Trade, Gatot Ibnu Santosa, disclosed earlier that the government's inter-departmental team had approved a new gas price of US$1.35 per MMBTU for fertilizer companies - all state owned companies.
That price was far lower than the earlier agreed gas price for fertilizer company at US$1.60 per MMBTU.
Accroding to Suhadi, the establishment of the new gas prices would not affect the government's revenue from gas sector. But he did not provide further details.
Suhadi noted that fertilizer companies' spending for natural gas constituted the largest portion of the company's cost, accounting for around 60 percent to 70 percent of the production cost, as gas served as the main raw materials for fertilizers.
Currently gas prices differ among fertilizers companies, basically ranging from US$1.00 to $2.00 per MMBTU. Pusri and PT Pupuk Kujang, for instance, pay $1.80 per MMBTU of gas to state oil and gas firm Pertamina.
PT Petrokimia Gresik pays $2.00 per MMBTU of gas, PT Pupuk Iskandar Muda and PT Pupuk Kaltim pay only $1.0 per MMBTU.
Suhadi said most local fertilizer producers lost potential profits because of the high gas prices and the low selling prices of fertilizers to farmers as the government had set the fertilizers selling prices at Rp 1 million per ton.
He noted that offshore fertilizer companies mostly enjoyed low prices of gas, mostly below $1.00 per MMBTU. Meanwhile, international prices of fertilizers currently stood at Rp 1.08 million per ton with an exchange rate of Rp 8,000 per U.S. dollar. (*)