Government cuts the price of gas sold to fertilizer producers
Friday, July 25 2003 - 03:37 AM WIB
The mechanism in the payment of the subsidy for the purchase of gas will also be changed to gas producers from fertilizer producers at present in a bid to limit the complicated monitoring procedures.
Director General of Chemical, Agricultural and Forestry Industry at the Ministry of Industry and Trade, Zaenal Arifin, said that although the fertilizer would buy their gas at US$1 per MMBTU, the actual prices would still be based on market prices.
If the market price reaches US$2 per MMBTU during the time of purchases, the difference would be paid by the government. Under the new mechanism, the subsidy will be paid to gas producers by the deduction of their tax payment. At present, the subsidy is paid through fertilizer producer.
According to Zaenal, the cut in the price will enable the fertilizer producers to reduce the price of fertilizer to Rp 1,050 from Rp 1,150 per kg, the price of ZA fertilizer to Rp 900 per kg from Rp 1,000 per kg, the price of TSP fertilizer to Rp 1,400 per kg from Rp 1,500.
The cut in the gas price will also be able to reduce the government?s subsidy for the sales of fertilizer by between Rp 350 billion to Rp 500,000. This year, the government has allocated a fertilizer subsidy of about Rp 1.3 trillion. (*)