Indonesian Fertilizer Industry Is Out of Gas

PT Pupuk Indonesia Holding Company or PHIC is struggling to find gas at a reasonable price. The president-director of PIHC, Aas Asikin Idat, revealed that the industry suffered from two big problems related to the gas. The first was the lack of gas supply, and the second was the absence of price certainty and exclusive supply.

Aas continued the explanation by pointing out PT Pupuk Iskandar Muda’s problem. As one of the company’s sub-holdings in Aceh, it needs around 110 million cubic feet per day (MMSCFD) to fire up its two factories. Unfortunately, the company can only get 30 MMSCFD and, therefore, the factory utilization can only reach up to 50 percent. A similar thing happened to PT Pupuk Kujang. Its two factories, consuming around 101 MMSCFD at their peak, are currently suffering from 10 MMSCFD shortages, which can potentially hit 25 MMSCFD in 2021.

The nonexistent long term solution for the gas price is causing problems as well. Aas said that contractual gas price would be over in 2021-2022, but his side had not received any contract extension offer. He also had to renegotiate everything and prevent the factories from stopping the operational. On average, PIHC and its subsidiaries must spend a significant amount of money on gas procurement.