Government fixes prices of gas sold to fertilizer producers
Monday, October 2 2000 - 04:00 AM WIB
The inter-government team has agreed to fix prices of gas sold to three major urea fertilizers PT Pupuk Siriwaijaya (Pusri) in Palembang, South Sumatera, PT Pupuk Kujang in West Java and Pupuk Kaltim in East Kalimantan at between US$1.60 and $1.65 per million British Thermal Unit (MMBTU).
Director General of Chemical, Agricultural and Forestry Products Gatot Ibnu Santoso said in Jakarta last week that the new gas prices would become effective soon after they received approval during the forthcoming Cabinet meeting.
He said that the new prices would be little bit higher than the $1.2 per MMBTU proposed by the fertilizer producers. "The new prices are the optimal result that could be made at the moment," he told Bisnis Indonesia.
According to him, the price of gas sold to Pusri has been fixed at $1.65 per MMBTU and $1.60 per to PT Pupuk Kujang. The price of the gas sold to Pupuk Kaltim has been also set at $1.60 per MMBTU but the new price would become affective only after the current contract ended.
Pupuk Kaltim at present buys gas at $1 per MMBTU from the government.
Gatot said that the new prices would not be applied to gas sold to other fertilizer companies including PT Aceh Asean Fertilizer (AAF).
He said that the new price is lower than the current average of $1.8 per MMBTU and the cut is needed so that the fertilizer producers would be able to cut the prices of fertilizers sold to farmers.
"At present the price of fertilizer in the international market is around $140 per ton, much lower compared to about $98 per dollar in the domestic market. The price gap could encourage smuggling," he added,
At present the government sells the gas to fertilizer at different prices ranging from $1 to $2 per MMBTU, depending on their respective contracts.
The gas for the gas sold to Pusri's IB plan is set at $1.5 per MMBTU while those supplied to the company's three other production plants are $1.85 per MMBTU. The price for gas sold to Pupuk Kaltim's three fertilizer plants is set at $1 per MMBTU while to POPKA is fixed at $1.85 per MMBTU.
Under the existing contracts, the price of gas sold to PT Pupuk Kujang, PT Pupuk Iskandar Muda and PT AAF is $1 per MMBTU but those sold to Petrokimia Gresik is set at $2 per MMBTU. (*)