Indonesian fertilizer makers face severe gas supply shortage

Indonesian fertilizer producers are facing acute gas supply shortage problems that forced them to cut their output and threaten to jeopardize the government?s program in agriculture sector, Minister of State Owned Enterprises Sugiarto said on Tuesday as quoted by Detik.Com

Sugiarto told parliamentary hearing that currently fertilizer firms PT.Pupuk Siwidjaja, PT.PIM, PT. AAF, PT.Pupuk Kujang, PT.Pupuk Kaltim and PT. Petrokimia Gresik need 851.5 MMCFD of gas, but only 584MMCFD are currently available.

Sugiarto said the government?s involvement was needed to make state oil and gas company Pertamina and production sharing contractors to prioritize gas supply to fertilizer makers.

Indonesian fertilizer makers are enjoying subsidy as part of the government program to ensure Indonesian farmers to get low fertilizer price. But the subsidy had made gas suppliers to lose appetite to sell gas to fertilizer maker, as it would be much more profitable to sell gas to other industrial users such as state electricity firm PLN and state gas distribution firm PGN. The low fertilizer price had also make it attractive to smuggle the fertilizer to other neighboring countries. in a bid to secure domestic supply, fertilizer makers are also prohibited to tap overseas market where fertilizers' prices are genarally higher than that of domestic prices.(*)