Fertilizer association urges gas price cut

Fertilizer association urges gas price cut

M. Taufiqurrahman, The Jakarta Post, Jakarta

The Indonesian Fertilizer Producers Association (APPI) could
guarantee an affordable fertilizer price for the domestic market
only after a price reduction for natural gas.

APPI chairman Zaenal Soedjais said Monday that only if the
price of gas was reduced to US$1 per million metric British
thermal unit (MMBTU), could producers guarantee the retail price
of fertilizer would be Rp 1,050 (11 U.S. cents) per kilogram,
lower than the current price of Rp 1,150.

"We will be able to sell fertilizer at Rp 1,050, even without
a subsidy from the government," he told reporters after a hearing
with the House of Representatives Commission V on trade and
industry.

Saying that the domestic price of gas was too burdensome for
fertilizer producers in the country, APPI had earlier called on
the government to lower the price of gas from the current $1.85
to $1 per MMBTU.

In comparison, countries like Russia and Saudi Arabia set the
price of natural gas at 60 U.S. cents for the petrochemical
industry. Spending for natural gas makes up 50 percent to 60
percent of fertilizer production costs.

Currently, redundant and costly price monitoring is underway
to ensure that the subsidy for fertilizer reaches the most needy
consumers.

However, Zaenal said the price warranty could be given only if
the rupiah value against the U.S. dollar was stable.

The association also demanded that the setting of the domestic
gas price for fertilizer producers be sanctioned with a
presidential decree.