PIM still unable to secure gas purchase contract from Pertamina

Aceh-based state owned fertilizer producer PT Pupuk Iskandar Muda (PIM) is still unable to secure a contract to secure gas supply from state owned oil and gas company Pertamina for its second fertilizer plant due to difference in prices, Koran Tempo reported on Monday.

PIM?s president director, Hidayat Nyakmat, said late last week that the gas sale-purchase agreement which was initially scheduled for signing in July had been delayed because Pertamina still did not agree with the company?s price request.

He said that the Ministry of Finance would soon settle the price difference after hearing from PIM about the fertilizer production cost and the projected profit margin from the sale of the fertilizer in the domestic market. "Our demand is simple? we want a little margin from the sale of the fertilizer in the domestic market," he added.

The government has set gas prices of between US$1 and $1.85 per million metric British thermal unit (mmbtu) to the country?s fertilizer producers depending on the production cost of respective companies. PIM has proposed to buy the gas at $1 per mmbtu. But the proposal has not been approved.

PIM is currently constructing its fertilizer second plant, which is called PT PIM II as part of its expansion plan. The construction of the second plant which will have seven urea production units and two NPK fertilizer production units was started in 1996 but it had been delayed for at least three times. The construction was continued in April and is expected to be completed in 2003, with urea production capacity of 570,000 tons a year. (*)