Govt reportedly fails to pay fertilizer subsidy<\/p>\n
M. Taufiqurrahman, The Jakarta Post, Jakarta<\/p>\n
An association of fertilizer producers revealed on Monday the
\ngovernment has yet to meet its obligation to disburse a subsidy
\naimed at producing affordable fertilizers for the domestic
\nmarket.<\/p>\n
The chairman of the Indonesian Fertilizer Producers
\nAssociation (APPI), Zaenal Soedjais, said the Rp 1.31 trillion
\n(US$147.19 million) subsidy -- stipulated in the state budget for
\nfinancial year 2003 -- had not been distributed by the government
\nto the country's fertilizer producers.<\/p>\n
\"A ministerial decree pertaining to the subsidy was already
\nissued in February, but thus far there has been no authorization
\nfrom the Ministry of Finance to disburse the fund,\" he told
\nreporters after a hearing with the House of Representatives
\nCommission V on trading and industry.<\/p>\n
Zaenal also disclosed that the government had not met its
\nobligation to pay a natural gas price subsidy worth Rp 672
\nbillion for 2002.<\/p>\n
The subsidy, called the domestic gas incentive, was aimed to
\nsafeguard the supply of low-priced gas for fertilizer producers
\namidst the volatility of oil and gas prices.<\/p>\n
The top executive of fertilizer firm PT Pupuk Sriwijaya
\n(Pusri) said that the government's unwillingness to disburse the
\nsubsidy has already cost the producers as they have suffered
\nlosses from paying interests on loans and foreign exchange
\nfluctuations.<\/p>\n
APPI -- whose membership includes Pusri in South Sumatra, PT
\nPupuk Kaltim in East Kalimantan, PT Petrokimia Gresik in East
\nJava, PT Pupuk Kujang in West Java, PT Pupuk Iskandar Muda and PT
\nAceh Asean Fertilizer in Aceh -- has a total production capacity
\nof 6 million tons of urea and 4 million tons of ammonia in 2002.<\/p>\n
Along with calling on the Ministry of Finance to disburse the
\nsubsidy immediately, the association also urged the government to
\ndo more in supporting the fertilizer industry.<\/p>\n
\"It is difficult for Indonesian producers to compete with
\nproducers in foreign countries to get a significant share in the
\nworld market when the price of gas in Indonesia reached $1.85 or
\n$2 per million metric British thermal unit (MMBTU),\" he said,
\nadding that countries like Russia and Saudi Arabia set the price
\nat 60 U.S. cents.<\/p>\n
He said that as long as the price of gas remained high, there
\nwere little possibility that the retail prices of fertilizer in
\nthe country would decline.<\/p>\n
\"Even if it was paid immediately, the subsidy wouldn't help
\nmuch if the price of domestic gas is $1.50 to $1.80 per MMBTU,\"
\nhe said.<\/p>\n
He cited the example of what Malaysia had done to help the
\nfertilizer industry.<\/p>\n
\"Malaysia, whose gas supply comes from Indonesia, has
\ndiscounted the price of gas for the petrochemical industry by 50
\npercent. This has helped the industry there a lot,\" Zaenal said.<\/p>\n
When asked if the association also asked for the same
\ntreatment, he said: \"For the price of urea to be lowered from Rp
\n1,150 to Rp 1,050 per kilogram, there has to be a 20-cent
\nreduction in the price of gas. We don't ask much, but a price of
\n$1 per MMBTU of gas is most suitable for us.\"<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-reportedly-fails-to-pay-fertilizer-subsidy-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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