The fate of fertilizer producer PT PIM remains uncertain

The government has guaranteed that it would provide a gas supply to ensure that the state owned fertilizer producer PT Pupuk Iskandar Muda in Aceh would be able to operate until the end of this year, Kompas reported on Saturday.

State Minister for Supervision of State Owned Enterprises Sugiharto said in Denpasar, Bali on Friday that the government would provide a cargo of LNG to enable PT PIM to maintain its operation until the end of this year.

The minister, however, said whether or not the company would be able to continue its operation thereafter was still under discussion. ?PT PIM still awaits the political decision whether or not it could continue its operation next year,? he told reporters during his official visit on the island.

According to the minister, the government is preparing two options in deciding the future of the fertilizer company ? to maintain its operation or to close down the company. The minister said that based on an initial study, the government will gain higher profit margin if the province?s gas production is sold in the form of LNG, rather than in the form of fertilizer.

?It is a difficult decision. All related agencies will therefore be involved in deciding what to do with PT PIM,? he said.

The minister said that PT ASEAN Fertilizer Plant which is jointly owned by members of the Association of Southeast Asian Nations (ASEAN) would be liquidated due to difficulties in obtaining the gas supply. ?The liquidation plan has been approved by the shareholders but the time for the liquidation has not been fixed,? he added.

PT PIM and PT ASEAN Fertilizer Plant have suffered serious shortage of gas supply due to the depletion of the gas reserves at the Arun gas field. At present, the field?s gas production is only enough to meet the export commitment of the Arun LNG plant.

PT ASEAN Fertilizer has stopped its operation for the past several months, while PT PIM would still be able to operate thanks to the government?s swap arrangement with the Arun LNG plant under which the government would buy LNG from overseas market to meet part of its export commitment, so that part of the gas production from the Arun gas field could be supplied to PT PIM.(*)