PT Petrokimia Gresik to suffer losses of $6.2m this year<\/p>\n
JAKARTA (JP): State-run petrochemical company PT Petrokimia
\nGresik is expected to suffer losses of up to Rp 13.78 billion
\n(US$6.2 million) this year due to high interest rates and the
\ndepreciation of its new ammonia and urea production units.<\/p>\n
The company's president, Endarto, said in a hearing with the
\nEnergy and Manufacturing Commission of the House of
\nRepresentatives here yesterday that Petrokimia Gresik had
\nborrowed $136 million from the World Bank, of which $126.2
\nmillion was used to finance its new projects.<\/p>\n
The urea production unit, with an annual production capacity
\nof 460,000 tons, is the new plant at Petrokimia Gresik, while the
\nammonia unit is the expansion project with an annual capacity of
\n445,000 tons. The two plants started commercial production last
\nDecember.<\/p>\n
"It's normal to bear losses for the first and second year of
\noperation," Endarto said.<\/p>\n
Besides urea, Petrokimia Gresik also produces other kinds of
\nfertilizer, such as TSP at an annual output rate of 1.2 million
\ntons, ZA at 650,000 tons, DAP at 80,000 tons and NPK at 50,000
\ntons. The company is the only producer of non-urea fertilizers in
\nthe country.<\/p>\n
He said the company's production costs have been increasing
\nbecause of high interest rates. Last year, the company set aside
\nRp 74.96 billion for debt servicing, 50 percent higher than in
\n1993.<\/p>\n
The company's total debts had reached Rp 1.31 trillion as of
\nlast year, 8.26 percent higher than in 1993, while its total
\nassets as of last year stood at Rp 1.79 trillion.<\/p>\n
Subsidy<\/p>\n
In addition to high interest rates, Endarto said the
\ngovernment eliminated its subsidy for the production of ZA and
\nTSP fertilizers -- two main products of Petrokimia Gresik -- last
\nOctober and that domestic fertilizer prices are still kept far
\nbelow international prices.<\/p>\n
He noted that his company sells its TSP, Urea and ZA
\nfertilizers to the government at only $182, $79 and $105 per ton
\nrespectively, as compared to the world market prices of $195,
\n$235 and $105, respectively.<\/p>\n
He said that because his company's profits have dropped
\nsteadily for the last five years, the profits will not offset
\nthis year's projected losses.<\/p>\n
Petrokimia Gresik's unaudited pre-tax profits dropped 56.89
\npercent to Rp 12.81 billion last year from Rp 29.72 billion in
\n1993.<\/p>\n
To reduce this year's projected losses, Endarto said his
\ncompany will increase its exports now that the domestic demand
\nhas been satisfied.<\/p>\n
Besides Petrokimia Gresik, according to Minister of Industry
\nTunky Ariwibowo, two other fertilizer companies are projected to
\nsuffer losses this year.<\/p>\n
The two firms are PT Pupuk Sriwijaya (Pusri), which is
\nestimated to lose up to Rp 88 billion, and PT ASEAN Aceh
\nFertilizer, which may lose Rp 13.7 billion.<\/p>\n
Pusri's projected losses might be caused by high interest
\nrates and the depreciation of its new expansion project, while
\nmost of ASEAN Aceh Fertilizer's losses will likely come from the
\nfluctuation of foreign exchange rates. (rid)<\/p>",
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