Government agrees to lower gas prices for fertilizer producers

The government has agreed to lower prices of natural gas sold to fertilizer producers by about 30 percent to US$1.3 per MMBTU from $1.8 per MMBTU in a bid to help curb the surge in the prices of fertilizer in the local market, Bisnis Indonesia reported on Thursday.

?The decision to revise the fertilizer price has been made. We just wait a ruling for the implementation of the decision,? M. Alwin R. Rosad, the president of state-owned fertilizer producer PT Pupuk Sriwijaya (Pusri) said in Jakarta on Wednesday. ?The most important is that the government has agreed to reduce the gas sold to fertilizer producers to $1.3 per MMBTU from the current $1.85 per MMBTU,? he added.

With the price of $1.3 per MMBTU, Alwin believed Pusri and other fertilizer producers such as Pupuk Kujang and Pupuk Kaltim would be able to maintain the fertilizer price at the current level of Rp 150 per kilogram so that the fertilizer would be still affordable to farmers.

Without the cut in prices of the gas which contributes 60 percent of the production costs, it would be difficult for fertilizer companies to maintain the fertilizer prices at the current level, he said, adding that the current fertilizer price has not increased since 1998. (*)