Govt to revoke plan of subsidizing gas sales to fertilizer producers

The government will revoke next year its plan of subsidizing the sales of natural gas to the country?s fertilizer producers, and would instead provide subsidies for fertilizer prices, a fertilizer industry leader said as reported by Republika daily on Thursday.

Zainal Soedjais, president director of state fertilizer maker PT Pupuk Sriwijaya (Pusri), said the revocation of the plan to subsidize gas sales to fertilizer producers was meant for avoiding accusations that the government sided with fertilizer makers, and not with farmers.

Zaianal said policies on gas sale subsidy would be implemented in January 2003. The plan had been discussed in meetings of officials from different ministries including the ministry of Agriculture, Ministry of Finance and Ministry of Industry and Trade, Zainal added.

At present, fertilizer producers buy natural gas at US$1.3 per million metric British thermal unit (MMBTU) for the production of fertilizer for local farmers? consumption, and at $1.85 per MMBTU for exports.

In the past, the government provided direct subsidy on the sale of fertilizer to farmers, but changed the system in 1998 due to pressures from the International Monetary Fund (IMF). (*)