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)