Ministry proposes state gas shares for fertilizer firms

By Bernard Loebs

The Ministry of Energy and Mineral Resources is proposing the government allocate its gas shares to fertilizer firms so that they may get feedstock at affordable prices.

Agus Cahyono, Director of Program Development at the Directorate General of Oil and Gas, said the proposal will be sent to the Ministry of Finance and the Coordinating Ministry of the Economy for approval.

He said such scheme is being applied to the fifth production plant of state owned fertilizer firm PT Pupuk Kalimantan Timur also known as PKT 5. PKT 5 now receives the state gas shares from Sebuku PSC operated by UAE-based oil and gas firm Pearl Oil and Mahakam PSC operated by French firm Total EP Indonesie. The government sells the gas at a price level affordable to PKT.

Now, other fertilizer firms buy gas at market price but the government provides subsidies for their fertilizer products to make them affordable to farmers.

?The Coordinating Ministry of the Economy and the Ministry of Finance have to decide whether to provide subsidies for the gas or fertilizer product, rather than provide subsidies for both of them. If the proposal is accepted, all fertilizer firms will pay a similar price as PKT 5,? he said.

He noted that the government has agreed to allocate gas from the Jambaran and Tiung Baru fields in Central Java to state owned fertilizer firm PT Petrokimia Gresik in East Java. However, there isn?t yet any agreement regarding the price.

If the ministry?s proposal is accepted, the PKT 5 pricing scheme will be also applied to Petrokimia Gresik, he said.

Editing by Johannes Simbolon