Today, govt to cut gas prices for fertilizer producers

Today, Thursday, the government is slated to decide whether the government will cut the prices of gas for fertilizer producers and prices of fertilizers for farmers, an official said on Wednesday.

According to Director General of Agriculture Supports and Equipment Ato Suprapto, the Ministries of Agriculture, of Finance and of Industry and Trade had agreed on the level of prices for the two commodities.

The inter-departmental team decided earlier to cut down gas prices for fertilizer companies by 25 percent to US$1.20 per Million Metric British Thermal Unit (MMBTU) of natural gas.

Ato said if gas prices were cut to US$1.20 MMBTU, then fertilizer prices would be reduced to Rp 1,000 per kilogram. He noted that Rp 1,000 a kilo of fertilizers would be an ideal level for farmers. At that level, farmers would be able to enjoy their harvest, especially rice because the basic domestic selling prices of rice is set at Rp 1,400 a kilo.

Ato noted that currently gas prices for domestic fertilizer firms range from $1.00 to $2.00 per MMBTU of natural gas, far higher than the prices in other gas producing countries of between $0.50 and $1.20 per MMBTU.

Ato noted that cutting gas prices for fertilizer companies was only way to help them because the government could not increase domestic prices of fertilizer because it would burden farmers, who mostly live in poverty.

He acknowledged that there was a big gap between domestic and international prices of fertilizers. Fertilizers were sold at US$98 per ton in the domestic market, far lower than the international price of $135 per ton.

"The reduction of fertilizer prices is driven by our position to support farmers. And fertilizer companies and the Ministry of Mines and Energy have supported our stance (to help farmers). This afternoon (Wednesday afternoon), there was a meeting to set the prices of gas and fertilizers. Thursday, there will be a final meeting about this. So, just wait," Ato said. (*)