Govt to set lower price of gas for fertilizer firms

The government is planning a new policy on gas price for domestic industries that would help fertilizer firms to enjoy a lower gas price, the Koran Tempo daily reported Monday.

The plan was disclosed by Zaenal Arifin, the director general for chemical industry, agro, and forest product of the ministry of industry and trade.

Under the plan, fertilizer firms whose products are directed for local farmers should enjoy a lower gas price compared to firms whose products are for the export market.

The gas price for fertilizer firms are currently set at US$1.3-1.85 per mmbtu (million metric british thermal unit).

Fertilizer firms association (APPI) earlier demanded a lower gas price of around $1 per mmbtu for firms producing fertilizers for local farmers, and $1.5 per mmbtu for firms exporting their fertilizer products.

Zaenal said that the ministry of energy and mining had basically agreed with the idea of providing a lower gas price for fertilizer firms in a bid to help achieve national food security.

Elsewhere, Tempo said that the government was planning to also differentiate the price of gas for various industries. Those which use gas as raw material such as fertilizer firms should enjoy a lower price compared to those which use gas as source of energy. The higher price for the latter groups should force them conserve the use of energy.

Tempo said that gas represents around 60 percent of a fertilizer firm?s cost structure.(*)