Pusri denies allegation of urea crisis

Pusri denies allegation of urea crisis

JAKARTA (JP): PT Pusri, the sole authorized distributor of
urea fertilizer on the domestic market, denied yesterday that the
recent shortage of urea supply was caused by an increase in
exports.

Pusri's president, Suhadi, said the allegation that fertilizer
producers exported most of their urea to benefit from higher
prices on overseas markets was groundless.

"Not a single producer exported urea in the last two months.
All producers accelerated supplies to meet higher demand at
home," he told a hearing here with Commission VI of the House of
Representatives.

At the hearing, which was also joined by other state-owned
fertilizer producers including PT Petrokimia Gresik, PT Pupuk
Kaltim and PT Pupuk Iskandar Muda and PT Pupuk Kujang, Suhadi
said there was also no problem in the distribution system of urea
fertilizer.

He, however, did not explain the causes of the urea shortage.

The government buys urea from Indonesia's six fertilizer
producers at Rp 174 per kilogram. The low sale price to the
government is justifiable, given the fact that natural gas for
urea production is sold to the fertilizer producers at half of
normal prices. If the sales of natural gas were not subsidized,
the production cost could reach Rp 342 per kilogram.

Pusri, as the distributor, sells urea to retailers, comprised
of village cooperatives, at the government-set price of Rp 260
per kilogram. This includes the cost of transportation.

If the distribution costs plus the factory price (Rp 174)
exceeds the official retail price, the government should pay the
balance to the producers so that retail prices could be
maintained at a set level.

Suhadi said producers could not gain profits from the domestic
sales despite government subsidizing both production and
distribution.

Export

"The fertilizer companies should, therefore, export part of
their products to allow them to survive," he said.

Prices at international markets range from US$180 to $220 per
ton. Prices in Vietnam, Indonesia's main urea export market, can
even reach $228 per ton or Rp 660 per kilogram, more than double
the domestic price.

Suhadi said that the fertilizer plants should first obtain
government approval to export the urea. "Besides, the amount of
urea for export should not exceed the government's ceilings," he
said.

Export licensing is so strict that it would be very difficult
to carry out exports which have not been approved, Suhadi said.

Asked if the fertilizer crisis was caused by the involvement
of PT Aryoseto Widjaya, a private company owned by one of
President Soeharto's sons, Suhadi said that the company did
nothing harmful. "The company even helps farmers," he said.

Aryoseto is the only company appointed to process urea into
tablets for distribution in 18 regencies in Java, which have been
chosen as sites for pilot projects for the introduction of the
urea tablets to farmers. By using urea tables, farmers can not
only save fertilizer but can also increase rice production.

The country's total production of urea reached 5.5 million
tons last year, much more than the actual demand of around four
million tons. (hen)