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)