PT Puri 'owes' Pertamina US$40 million

PT Puri 'owes' Pertamina US$40 million

JAKARTA (JP): State fertilizer maker PT Pupuk Sriwijaya
(Pusri) is US$40 million in arrears for gas supplied by state oil
and gas company Pertamina, Pertamina said on Wednesday.

Pertamina director Soegianto said Pertamina had given Pusri
until Oct. 5 to pay off its obligations, though he promised not
to take strict action against the company if it failed to meet
the deadline.

"If Pusri can't pay by the deadline, no problem. We shall
continue supplying gas to the company as long as we are able to
do so."

"But, please talk with us. Probably the payment can be paid in
installments," Soegianto was quoted by Antara as saying.

Pusri has not been paying for its gas since the rupiah
significantly depreciated against the U.S. dollar last year. The
fertilizer company pays for the gas in dollars, but takes in
revenues in rupiah.

Pusri, based in Palembang, South Sumatra, uses gas to produce
its fertilizers as well as for fuel.

Soegianto noted that Pertamina was also facing financial
problems amid the monetary crisis due to several factors,
including the failure of several customers to pay for gas and
fuel orders.

According to the state-owned electricity company PLN,
Pertamina sells gas to Pusri for between US$1.50 and $1.85 per
million British thermal units (MMBTU).

Pusri's IB fertilizer plant consumes 55 million cubic feet per
day (MMSCFD) of natural gas from Pertamina at the price of $1.50
per MMBTU, while the Pusri II, III and IV fertilizer plants take
in a total of 155 MMSCFD of natural gas at the price of $1.85 per
MMBTU.

All other state fertilizer makers, including PT ASEAN Aceh
Fertilizer, Pupuk Iskandar Muda, Pupuk Kujang and Pupuk Kaltim
pay only $1 per MMBTU of gas from Pertamina.

PLN former president Djiteng Marsudi once complained that
Pertamina had set gas prices too high for PLN, saying it was one
reason behind PLN's soaring operating costs amid the monetary
crisis.

PLN is locked into a 10-year sales contract with Pertamina for
between $2.45 and $3 per MMBTU of gas.

Soegianto said the price of gas sold to state companies was
set by the government.

"Gas prices were set in line with international prices at the
time sales contracts were signed," Soegianto said.

Analysts have said PLN pays higher gas prices than fertilizer
plants due to a cross-subsidy scheme in which PLN subsidizes the
sale of gas to the fertilizer companies.

PLN signed gas purchase contracts with Pertamina between 1987
and 1994 when the company enjoyed large profits. The monetary
crisis, however, has put PLN on the verge of bankruptcy.

Pertamina sells gas to state companies at flat prices, but
sells to foreign firms at prices fluctuating in line with the ups
an downs of international oil prices. (jsk)