Government OKs gas subsidies for fertilizer plants: Report
Tuesday, October 21 2003 - 02:23 AM WIB
Director general of oil and gas Iin Arifin Takhyan said that the subsidies aimed to revive the operations of both plants and to provide affordable fertilizers for farmers, Koran Tempo reported.
PT ExxonMobil Oil Indonesia Inc. (EMOI), the subsidiary of American energy giant ExxonMobil Corp., the sole gas producer in the province, has halted gas supplies to the fertilizer producers for months due to the disagreement over price. EMOI also ship its gas to the Arun LNG plant in Lhokseumawe.
AAF and PIM II reportedly asked to buy EMOI’s gas at US$1.5 per million British thermal unit (MMBTU), but ExxonMobil sets the price at $1.85 per MMBTU, according to the paper.
Iin said the government would provide a subsidy of $0.35 per MMBTU for gas sold by EMOI to both fertilizer firms.
However, Koran Tempo said a senior official at the Ministry of Finance denied Iin’s statement.
The ministry’s director general of financial institutions Darmin Nasution told the paper that the ministry was still studying the subsidy scheme and had yet to make a decision on the matter.
If the government approves of the subsidies, EMOI will resume gas supplies to both fertilizer firms and, as a result, cut supplies to the Arun LNG plant. Should EMOI cut gas supplies to Arun, the government will take LNG from the Bontang LNG plant in East Kalimantan to cover Arun’s obligations to foreign buyers.
AAF belongs to five founding members of ASEAN with Indonesia holding a 90 percent stake.
The government always provides subsidies for fertilizers sold to farmers. For the 2003 state budget, the subsidy reaches Rp 1.31 trillion. The subsidy is usually delivered to gas producers so that fertilizer firms can get cheap gas supplies. (*)