Jakarta, March 7, 2024 - Government policies regarding gas prices have significant implications for the industrial sector, especially agriculture. One sector greatly affected by gas price policies is the fertilizer industry, which plays a crucial role in supporting agricultural productivity and food security in Indonesia.

The Certain Natural Gas Price Policy (Kebijakan Harga Gas Tertentu (HBGT)) has been implemented by the Government for seven industries since 2020, one of which is the fertilizer industry. As the largest fertilizer producer in the country, Pupuk Indonesia assesses that the HGBT policy supports the Company in maintaining the availability and affordability of fertilizers for farmers. Additionally, natural gas-based fertilizers such as Urea, NPK, and ZA will help improve the productivity of various types of crops, plantations, horticulture, and so on.

Rahmad Pribadi, President Director of Pupuk Indonesia, stated that gas is an essential raw material to ensure the availability, affordability, and national food security of fertilizers. "The connection between fertilizers and food security is very clear. It's a general consensus that food crops, when not provided with N (Nitrogen)-based gas fertilizers, can decrease productivity by 50%, even though Indonesia has gas resources. With a production capacity of 14.5 million tons per year, Pupuk Indonesia is certainly ready to support agricultural industry productivity through fertilizers," Rahmad revealed during the 2024 IDE Katadata event in Jakarta on Tuesday (3/5/2024).

Pupuk Indonesia revealed that the implementation of the HGBT policy resulted in gas consumption cost savings of around Rp10.91 trillion in 2022. With HGBT, domestic fertilizer production becomes more competitive, allowing the government to determine the volume or allocation of subsidized fertilizers optimally. This is a significant step that greatly assists Pupuk Indonesia, which is tasked with supporting national food security through the provision of quality and affordable fertilizers.

Therefore, Pupuk Indonesia recognizes the importance of the sustainability of HGBT, where gas price regulations are needed to remain competitive in supporting the expansion of subsidized fertilizer production capacity. With this condition, fertilizer industry productivity can be significantly increased.

This aligns with the new policy set by the President of the Republic of Indonesia, Joko Widodo, regarding the increase in subsidized fertilizer allocation from 4.7 million tons to 9.55 million tons throughout 2024. The policy determination could be a crucial step in supporting farmers' productivity.

Farmers, as the forefront of food production, are highly vulnerable to fertilizer price fluctuations and availability. If fertilizer prices soar, farmers may be compelled to reduce fertilizer usage, which could impact harvest productivity or even choose not to plant, ultimately affecting national food production. It is known that the policy will end in 2024.

"For us in the fertilizer industry, the concern regarding food security arises after 2024. Because the agro-input source is gas. As known, the certain natural gas price policy toward the fertilizer industry will end in 2024. If the HGBT policy is not continued, there might still be availability, but affordability for farmers will be questionable," Rahmad concluded.