Govt cannot cut gas prices to $1.3 per MMBTU

The government cannot meet demands to cut gas prices for fertilizer producers to US$1.3 per million British thermal unit (MMBTU) from $1.85 per MMBTU now because of too high-risk calculation.

After meeting with Finance Minister Prijadi P.S., Minister of Industry and Trade Luhut B. Pandjaitan said that the risk calculation in the gas exploration contract was too high, and therefore it would not possible for the government to cut gas prices to $1.3 per MMBTU as requested by fertilizers producers.

"It is just not possible to cut it to $1.3 per MMBTU. It is still possible to cut it to $1.6 per MMBTU, but that needs to be discussed further," Luhut said in his office on Monday.

Earlier, the president of fertilizer company in East Kalimantan, PT Pupuk Kaltim, Syaiful Amir, said that his party was still waiting for the government's decision to lower further gas prices. He noted that the current gas prices of $1.85 per MMBTU for fertilizer companies make local fertilizer producers could not compete with imported fertilizers.

Syaiful noted that the high prices of natural gas, the main input source for fertilizer firms, put the privatization of Pupuk Kaltim on hold. (*)