JAKARTA (4/2) - Secretary General of the Indonesian Fertilizer Producers Association (APPI), Achmad Tossin Sutawikara, said that the implementation of a certain natural gas price (HGBT) of US$ 6 per million British thermal unit (mmbtu) has a positive impact on the performance of fertilizer producers. According to him, national fertilizer production has consistently increased even amid the impact of the Covid-19 pandemic.

"Our production has increased since 2017, until now. The improvement is quite significant.” Tosin explained.

Tossin further stated that the implementation of HGBT or distribution of cheap gas, particularly to the fertilizer industry, has been running relatively smoothly for the five APPI members since 2020. Among them are Pupuk Kaltim, Petrokimia Gresik, Pupuk Kujang, Pupuk Iskandar Muda, and Pupuk Sriwidjadja.

Even though it occasionally experiences a decrease in gas pressure at certain times, it does not have a significant impact on the overall fertilizer production process. “For example, going to Petrochemicals the gas pressure drops, but then it returns to normal. This means that HGBT is very helpful in achieving production," said Tossin.

Similarly, Director of Portfolio & Business Development of PT Pupuk Indonesia (Persero) Jamsaton Nababan said that the low-cost gas or HGBT policy had also succeeded in increasing the efficiency of the fertilizer industry. According to him, the production of fertilizers and non-fertilizers within the Pupuk Indonesia group has increased in the last two years.

"Before receiving the cheap gas incentives, our production was around 18.91 million tonnes in 2019. After receiving the incentives, production rose by around 600 thousand tonnes to 19.51 million tonnes in 2021," said Jamsaton, Friday (3/2/2023).

The increase in production, he continued, was the result of efficiency at the existing factory. Efficiency is carried out by replacing old factories that are wasteful in gas consumption with new plants that are more efficient in gas consumption. So that with the same volume of gas consumption, the factory can have more production capabilities.

In addition to efficiency for the existing factory, Pupuk Indonesia will also add capacity by operating a new factory. In the near future, Pupuk Indonesia will inaugurate the PT Pupuk Iskandar Muda (PIM) NPK fertilizer factory in Lhokseumawe, Aceh, with a production capacity of 500 thousand tons per year.

Apart from that, there is also the Pusri 3B fertilizer factory project with a production capacity of 907,500 tons of urea fertilizer per year. This plant will replace the Pusri 3 and 4 fertilizer plants which are already less efficient in gas consumption. Currently, the Pusri 3B project is still in the process of evaluating bidding documents for tender participants and is expected to be completed in mid-2023.

Then there is also a plan to develop a fertilizer industrial area in Fakfak Regency, West Papua, which is one of the National Strategic Projects (PSN) with a production capacity of 1.15 million tons of urea fertilizer. This project can also become a grassroots project in improving the economy of the people in Papua.

"So our calculation is that now our production capacity is 13.97 million tons, then in 2030 after the project is completed it will be 16.87 million tons, or an increase of around 3 million tons," said Jamsaton.

As for the high price of fertilizer, Jamsaton said that this was the result of the Russia-Ukraine war. Because Russia is a world producer and supplier of raw materials for fertilizers.

“Because of the war all raw materials were embargoed, including phosphate and potassium. So it's not just a matter of price, but raw materials that are not on the market," explained Jamsaton.