New govt seeking ways to save AAF

Zakki P. Hakim, The Jakarta Post/Jakarta

The new government is seeking ways to avert the closure of Aceh- based fertilizer manufacturer PT Asean Aceh Fertilizer (AAF), as the Ministry of Industry proposes several options, a senior official has said.

Minister of Industry Andung A. Nitimihardja said that the ministry had discussed the matter with Oil and Gas Regulatory Implementing Body (BP Migas), the regulator that oversees the country's oil and gas upstream sector, to ensure the delivery of natural gas -- a key raw material -- to the firm.

"We are seeking alternatives to closing AAF. All stakeholders must prioritize national interests over individual benefit," he said on Tuesday.

He said that one of the options being discussed was to reschedule liquefied natural gas (LNG) exports to Japan and South Korea, and to obtain gas from other producing areas in the country.

The previous administration of Megawati Soekarnoputri announced in October that it wanted to shut down AAF because existing and future natural gas production in the province was considered insufficient to cover both LNG export commitments and the needs of other manufacturers there.

The natural gas reserves in the Arun gas field in the province have been declining, while most of the gas output is exported.

Andung explained that one of the options being considered was to use gas from Bontang gas field in East Kalimantan to help cover Arun's export commitment to the Japanese and South Korean buyers, while part of the Arun output could still be used for fertilizer firms in the province.

However, such an option would require PT Pupuk Kalimantan Timur (PKT) in East Kalimantan to close one of its factories, as more reserves in the region would be allocated for LNG production, he said.

He acknowledged, however, that it might be difficult to convince PKT, but he also pointed out that it was in the national interest.

It was not immediately clear how much AAF would have to pay for the natural gas, should the fertilizer maker continue operating, as Andung said the ministry was still calculating.

Since it started in 1979, AAF had contributed to the development of various economic sectors in the province such as employment, trade and small- and medium-sized enterprises.

The former government said, however, that the proposal to shut down AAF would still consider other shareholders, including the governments of Malaysia, Thailand, Singapore and the Philippines.