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.