Aceh fertilizer firms call for quick solution to gas shortage

P.C. Naommy/ Teuku Agam Muzakir, The Jakarta Post, Jakarta, Lhokseumawe, Aceh

Fertilizer firms in Aceh urged the government to quickly solve their gas supply problem, which has caused suspension of operations and is costing them millions of dollars per month.

President of ASEAN Aceh Fertilizer (AAF) Rauf Purnama said on Wednesday that the shortage of natural gas had forced the company to suspend operations, causing a total loss of US$3 million a month, including $1.5 million in potential revenue and $1.5 million in maintenance and salaries.

The firm has continued to remunerate its workers and maintain its facilities despite the suspension of operations.

"This problem could ruin Indonesia's reputation in the eyes of the international community, since 40 percent of the shares in this company are owned by (the governments of) Malaysia, Singapore, the Philippines and Thailand," said Rauf after a meeting with Minister of Energy and Mineral Resources Purnomo Yusgiantoro at the ministry. The remaining 60 percent shares are owned by the Indonesian government.

AAF stopped operation in August last year. It resumed operation in December, but after several days stopped again when the gas supply stopped.

Rauf met with Purnomo together with Hidayat Nya Mat, the president of PT Pupuk Iskandar Muda (PIM), which has also suspended one of its two production plants after natural gas supplies stopped.

Hidayat said that government should intervene to delay shipments of liquefied natural gas (LNG) from Aceh to foreign buyers so that fertilizer firms in the province could get enough supplies of gas for their production.

Activities at the fertilizer companies in Aceh have been disrupted for several months due to a shortage of gas supplied by Exxon Mobil Oil Indonesia (EMOI), the sole gas producer in the province.

EMOI, a subsidiary of American energy giant ExxonMobil Corp., has seen its gas reserves depleted over the past few years, from 1.36 billion cubic feet per day (BSCFD) in 2003 to an estimated 0.8 BSCFD in 2007. This has forced LNG producer PT Arun NGL Co. to close some of its trains in Lhokseumawe.

The recent decline in EMOI's gas reserves meant it was unable to supply enough gas for Arun and both fertilizer firms.

Furthermore, the fertilizer firms have demanded the government continue its gas subsidy.

In the past, in a bid to provide farmers with cheap fertilizer, the government provided subsidies to cut the price of gas for fertilizer firms to $1.50 per million British thermal units (MMBTU), as against the international price of $3 per MMBTU. The current government now wants to cut the subsidies, resulting in a rise in the price of gas for the nation's fertilizer firms.

Employees worried about looming layoffs

Concerns over a possible layoff are rising among thousands of employees at the fertilizer companies in Aceh province as no solution has emerged to overcome the shortage in the supply of natural gas for the companies.

Edwar Salim, a representative of the labor union at Asean Aceh Fertilizer (AAF) said many workers were increasingly restless due to uncertainty over when the companies could resume operations. He said the workers had grown impatient over the managements' fruitless efforts in the negotiations with the government.

"We, the workers cannot just stand by and do nothing," Edwar told reporters at Lhokseumawe on Wednesday.

Abdullah, secretary-general of the workers' union at PIM, said each employee in the three fertilizer companies had to support at least five family members.

"From the three companies, we project around 27,000 people would lost their livelihood," Abdullah said.

At present, PIM employs some 1,500 workers while AAF has 800 workers.

Both Edwar and Abdullah said rising unemployment could worsen social conditions in the North Aceh regency which like the rest of areas in Aceh province had been facing prolonged conflict between the Free Aceh Movement (GAM) and the central government.