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Fertilizer industry facing shortage in gas supply 2010.

Current Issue

The country's fertilizer industry has operated at high rate with production and production capacity continuing to increase despite the fact that most the factories have been too old averaging more than 30 years in age. In 2009, the country's production of urea fertilizer rose 9.7% to 6.8 million tons from 6.2 million tons in the previous year. The production of non urea fertilizers increased from 2.5 million tons to 2.6 million tons.

In 2009, the government launched the program of revitalization of fertilizer factories with an investment of Rp 45.25 trillion. The fund was used to expand the production capacity for urea fertilizer by replacing five old factories and building a new factory. In a bid to expand the fertilizer industry, the government encourages the production organic fertilizers. However, developing organic fertilizer industry will face difficulty in supply of basic material (waste and animal manure from scattered areas.

The program of revitalization is also facing scarcity in gas supply as feedstock. The availability of gas supply for fertilizer industry, will determine the success of the program revitalizing fertilizer factories of state companies. The revitalization program will need around 509 MMSCFD of gas brining the total requirement to 981 MMSCFD including for old factories. The government has asked for guarantee of gas supply to feed urea factories for 20 years. The government asked gas producers under new contracts to give priority to meeting domestic gas requirement.

Meanwhile, the country's fertilizer industry will face competition from Chinese producers especially PetroChina with the implementation of the ASEAN-China Free Trade Agreement (ACFTA). Currently the country's fertilizer industry has a total production capacity of 9.1 million tons per year, far below China's 134 million tons per year. However, the country's fertilizer products are still more competitive in price and have met the Indonesian National Standard (SNI) for urea and ammonia. The Chinese products have not met the Indonesian standard.

Production capacity

Development of the country's fertilizer production capacity depends much on the policy of the government such as in fertilizer subsidy.

In 2009, the country's production capacity for urea fertilizer rose 2.2% to 8 million tons per year from 7.8 million tons in 2008. The production capacity for non urea fertilizers (ZA, TSP/SP-36 and NPK) reached 2.6 million tons per year in 2009 up from 2.5 million tons in the previous year.

The government has encouraged the use of complete fertilizer (NPK), which is considered more effective to improve productivity and efficient although the price is more expensive.

In 2009, PT Pupuk Kujang operated a new unit of production facility for NPK granular with a capacity of 100,000 tons per year. The new factory, which has been built with an investment of Rp 55 billion, brought the country's total production capacity for NPK to 1.01 million tons a year.

The additional capacity is line with the government's policy encouraging the farmers to use NPK by giving subsidy. NPK for use by farmers is subsidized but no subsidy for the plantation sector.

PT Pupuk Sriwijaya (PUSRI) is the oldest producer of urea fertilizer in Indonesia. It has six factories with a total production capacity of 2,280,000 tons per year. PT Petro Kimia Gresik is a producer of ZA, phosphate and NPK with a total production capacity of 2,583,000 tons per year.

PT Pupuk Kujang Cikampek is a producer of urea, ammonia and NPK with a total production capacity of 2,200,000 tons per year. PT Pupuk Kaltim is the country's largest producer of urea with a production capacity of 2,980,000 tons per year.

PT Pupuk Iskandar Muda, which has gone through difficult period of being suspended in operation on shortage of gas supply, has a production capacity of 1, 170,000 tons of urea and urea granule.

Producers

Indonesia has six producers of fertilizers. Five of them are state companies (BUMN), under a holding company PT PUSRI. PT Asean Aceh Fertilizer was liquidated in 2006, after lying idle and untended since 2003 causing damage to most of its factory machines.

PT Pupuk Sriwijaya (PUSRI)

PUSRI was established in 1959 in Palembang, South Sumatra. The factory was built to produce urea fertilizer. The factory came on stream in 1963 with an annual production capacity of 100,000 tons. The capacity was expanded later with the operations of four new factories in 1974, 1976, 1977 and 1994, bringing its total production capacity to 2.28 million tons per year.

PT Pusri (Persero) will build three new fertilizer factories named Pusri II B, Pusri III B, and Pusri IV B. The gas for the three plants is expected to be supplied from Donggi--Senoro, Southeast Sulawesi and Tangguh. Pusri, however, said the price of gas offered by PT. Medco one of the owners of the gas fields was too high at US$ 5.6 per MMBTU. Pusri wants the price at US$ 4.5 dollar.

Pusri will build two factories with a capacity 2.500-3.000 tons of fertilizer in Senoro, planned before 2012. In addition to relocation, Pusri plans to revitalize a factory in South Sumatra located at Tanjung Api-api. Relocation will be made by phases of three factories Pusri II, Pusri III, and Pusri IV that production would rise 60%. With an increase in gas supply from 225 million cubic feet per day (MMSCFD) to 318 MMSCFD.

PUSRI will sign a Gas Transportation Agreement (GTA) with PT Pertagas, a shipping subsidiary of Pertamina. Pertagas will transport gas bought by Pusri from Medco E&P and Pertamina.

PUSRI will buy has--180 MMSCFD from Pertamina EP and 45 MMSCFD from Medco E&P at the well head.

In addition, Pusri plans to build three Nitrogen Phosphate Kalium (NPK) factories. The first factory is expected to come on line in 2011 with a capacity of 1,100 tons per day. The location of the factory will not be far away from Pusri IB, II, III, IV, now in operation. The cost of building a factory is estimated at US$6 million.

PT Petro Kimia Gresik (PKG)

The government established the company in Gresik, East Java in 1972, to produce ZA (Zwavelzuur Ammonia or Ammonium Sulfate) fertilizer with a production capacity of 200,000 tons per year. The factory was designed to cope with shortage in supply of nitrogen-based fertilizers, which were growing in demand. Construction started in 1985 bringing the total production capacity of PT PKG for ZA to 650,000 tons.

In a bid to reduce dependence on imports for phosphate-based fertilizer, PKG has also built two production facilities for TSP (Triple super phosphate)/SP-36 in 1979, with a capacity of 500,000 tons each, bringing its total production capacity for phosphate fertilizer to 1 million tons per year.

PT PKG also has a urea fertilizer plant with a capacity 460,000 tons per year which came on stream in 1994. It also produces complete fertilizer NPK including the types of Phonska, Blending and Granule. Its production capacity for NPK totals 910,000 per year.

PKG plans to invest US$760 million in 2010 to expand its production capacity for urea and non urea fertilizers.

In May 2010, PKG hopes to complete the process of energy conversion from oil to coal to cost around US$60 million. The conversion is expected to save Rp 200 billion in energy every year.

PKG also plans to build a new urea fertilizer plant with a capacity of 1.5 million tons and an ammonia plant with a capacity of 2,000 tons per day. The project is estimated to cost US$500 million. Realization of the project is expected in 2011 depending on how far gas supply could be guaranteed. If gas is guaranteed from Exxon in 2014, construction of the project could start in 2011.

The ammonia plant will be needed to support its production of NPK. The company has always recorded a deficit of 350,000 tons of ammonia that has to be supplied from PT Pusri and PT Pupuk Kalimantan Timur.

The company also plans to build a phosphoric acid plant in cooperation with a Jordanian partner to guarantee supply of basic material for non-urea fertilizers especially NPK. The two sides already signed an agreement in January, 2010 to build the US$200 million project.

PT Pupuk Kujang

PT. Pupuk Kujang was established in 1975 with factory in Cikampek, West Java with a production capacity of 570,000 tons per year. The production capacity of PKC has increased after the operation of new factory in 2005 with the same capacity.

Currently PT. Pupuk Kujang has two urea factories with installed capacity of 570,000 tons/year each, two ammonia plants with a capacity of 330,000 tons/year each and 1 unit of NPK factory producing NPK Blending with an installed capacity of 300,000 tons/year brining its total production capacity to 2,200,000 tons per year.

In 2009, PT Pupuk Kujang operated another new NPK Granular factory built at a cost of Rp 55 billion at the Kujang Industrial Estates in Cikampek. The NPK Granular factory has a production capacity of 100,000 tons/year.

The country produces NPK with subsidy for food crop sector and without subsidy for plantation sector. Among the users of non subsidized NPK are sugar plantation companies PT Perkebunan Nusantara VII and VIII, PT Rajawali Nusantara Indonesia II and PT Perkebunan Bunga Mayang and oil palm plantation companies like PT Perkebunan Nusantara III, IV, V, VI, PT Golden Hope and PT Bandar Sawit Utama.

PT Pupuk Kalimantan Timur (PKT)

The government built the urea fertilizer factory of PT Pupuk Kalimantan Timur (PKT) in Bontang, East Kalimantan to be close to the gas source. The factory came on stream in 1984 with a production capacity of 700,000 tons.

Fore more factories were built later and came on line in 1985, 1989, 1999 and 2002, brining its total urea production capacity to 2.98 million tons. PKT is currently the country's largest producer of urea fertilizer. It plans to build new urea fertilizer factory to be named Kaltim V, which is expected to be operational in 2011. The new factory is designed to forestall shortage in domestic supply in 2015.

PKT plans to invest US$ 250 million in 2010 under its expansion program. The fund will be used to procure coal boilers to cost around US$ 120 million, build new NPK plant to cost US$ 20 million, for business expansion in plantation sector to cost US$ 20 million, and to build the 5th factory unit of Kaltim V to cost US$ 80 million.

The coal boiler is expected to be operational in June 2011. The fund for the procurement of the boiler is in loan from BRI making up 70% and in bonds making up the rest.

PKT also will set aside up to US$40 million for regular maintenance of factories. By May 2009, PKT had assets valued at Rp7.3 trillion.

PT Pupuk Iskandar Muda (PIM)

PT PIM was established by the government in Lhokseumawe, Aceh, in 1982. The company produces urea fertilizer. It factory started operation in 1984 with a capacity 600,000 tons per year. The company supplied the fertilizer for Aceh and North Sumatra. It has also exported part of its production.

Its second factory came on line in 2005 with a capacity of 570,000 tons per year. Its total production capacity in 2007 was 1.17 million tons. The two factories were forced to suspend operation in 2005 on shortage in gas supply. Later one of the factories could resume operation with gas supplied from East Kalimantan under a swap agreement with PT Pupuk Kaltim.

PIM still relied on ExxonMobil, which operates the Arun gas field for gas until 2009. For supplies in 2010 until 2020, PT PIM already signed long term contract with Medco E&P in March 2007.

In 2009, still had to look for 5 cargoes of gas in the form of Liquefied Natural Gas (LNG) needed for 2010. The supply is expected from Tangguh in Papua set aside from gas originally for US buyer Sempra under long term contract. In the same year PIM hired LNG Receiving Terminal in Arun, Aceh, to keep LNG in storage and for re-gasification.

In 2010, PIM needs 11 cargoes of LNG (a cargo is around 54,000 tons). Six cargoes are already secured including 3 cargoes from ExxonMobil Oil Indonesia and 3 cargoes from PT Total Indonesie at a price of around US$ 5 per mmbtu.

Production increasing

Indonesia's production of fertilizers, which are produced by state companies, has increased from year to year, but the production growth rate depends much on the government policy. The country's fertilizer products include urea and non urea (ZA, SP 36/SP 18 and NPK) fertilizers.

In 2009, the country's production of urea rose to 6.8 million tons up 9.7% from 6.2 million tons in the previous year. In 2009, the capacity utilization of the factories averaged 84% of the total capacity of 8,043 million tons per year.

The production of SP36 rose 2.3% to 742,986 tons, or a capacity utilization of only 74.3%.

The country's production capacity for ZA is 650,000 tons per year, but in 2009 the production exceeded the capacity to 767,837 tons or a capacity utilization of 118.1%.

The NPK production capacity is 1.01 million tons per year and in 2009 its production reached 1.5 million tons or a capacity utilization of 148.5%.

In 2010, the country's production of urea is forecast to reach 7.3 million tons or an increase of 7.35% from 6.8 million tons in 2009. Pusri is expected to contribute significantly to the urea production rise. Meanwhile, the NPK production is forecast to rise to 2.2 million tons with contribution from PKT, PKG and PKC. Increase is also predicted for the production of ZA to reach 900,000 tons, and that of SP 36 is forecast to scale up to 1 million tons,

The expected increase is boosted by growing domestic requirement. Demand for subsidized urea fertilizer in 2010 is estimated to reach 6 million tons up from 5.5 million tons in 2009.

In 2009, PKT's urea production peaked at 2,949,750 tons or 99% of its production capacity of 2.98 million tons per year. The company could operate at almost full capacity as it had no problem in gas supply. It received a supply of 230 MMscfd (million cubic feet per day) when demand for gas fell in the global market.

Apart from urea, PKT produced ammonia at a peak rate of 1,880,087 tons or 101.6% of its installed capacity of 1.85 million tons per year. However, its production of NPK reached only 119,641 tons or falling short of its target of 125,000 tons. In 2010, PKT sets production target for NPK at 200,000 tons and the production is expected to continue to scale up from year to year to support the provincial program to make East Kalimantan a production center for crude palm oil (CPO) in Indonesia,

In 2009, urea fertilizer sales of PKT reached 2.87 million tons including subsidized urea fertilizer for food crops making up 2.1 million tons, non-subsidized urea for plantations making up 555,000 tons, and for exports 207,000 tons, Only PKT could meet its export target allowed by the government in 2009. In 2009, the government issued license for the exports of fertilizers up to 700,000 tons by a number of state fertilizer producers--PKT, Pusri, PKC, PIM and PKG.

There was no shortage of urea fertilizer in East Kalimantan and other marketing areas of PKT in 2009 despite the exports.

In 2009, PKT posted Rp 8.9 trillion in income with pre tax profit of Rp 667 billion. In 2010, PKT sets production target for urea and NPK at 2.85 million tons with income forecast to reach up to Rp10 trillion.

Pusri succeeded in overshooting its production targets in 2009. Its urea fertilizer production reached 2,026,710 tons or 101.3% of its target of 2,001,000 tons set for 2009. Its production of ammonia reached 1,323,800 tons or 101.8% of its previously set target of 1,301,000 tons, and its production of organic fertilizers reached 967 tons or 162.7% of its target of 600 tons.

In 2009, Pusri's sales of fertilizers included 1,974,982 tons of urea, 1,482 tons of TSP, 2,991 tons of ZA, 2,859 tons of Phonska and 3,665 tons of organic fertilizers.

In 2010, Pusri has set production target at 2.05 million tons with income at Rp 5.12 trillion. So far 60% of Pusri's production is for Java and 40% for other islands.

PKC recorded urea production at 990,054.4 tons in 2009 or 100.01 % of its capacity. Its NPK production totaled 176,614.80 tons or 100.35 % of its capacity. Its sales totaled 822,167.80 tons of urea and 92,798.70 tons of NPK. By the end of 2009, its stocks included 114,418.39 tons of urea and 55,291.40 tons of NPK or exceeding the minimum requirement for 2 weeks. The quantity was enough for two months.

PKG recorded production of fertilizers at 3,507,000 tons, including Urea making up 443,000 tons, ZA 768,000 tons, phosphate 743,000 tons, phonska 1,401,000 tons, NPK Kebomas 144,000 tons and ZK 8,000 tons.

In November 2009, PKG operated NPK factory with an annual capacity of 2 million tons. In 2009, PKG built a number of fertilizer plants including III and IV units of NPK plants, I and II units of phosphate plant and III units of phonska plant--brining the total production capacity of PKG to 4.3 million tons. PKG plans to further expand its capacity in the next four years starting 2010 to 5.5 million tons.

In 2009, PKG distributed 3.4 million tons of fertilizers up from 3 million tons in 2008 including 499,841 tons of urea, 707,000 tons of ZA, 743,000 tons of SP-36 and 1.45 million tons of NPK Phonska. It also sold around 436,000 tons of ammonia to industries.

That year, its sales of subsidized fertilizers reached 3.45 million tons and non subsidized fertilizers 206,000 tons.

With the increase in production capacity, PKG hopes to boost distribution of subsidized fertilizers to 4.9 million tons in 2010 with income at Rp16.7 trillion.

PIM recorded urea production at 390,486 tons or 69% of its target of 566,000 tons in 2009. Its production of ammonia reached 317,973.30 tons or 90.59% of its target of 351,000 tons set for that year.

The company failed to reach its production targets on shortage of gas supply forcing it to suspend the operation of one of its two plants. From 2005 to 2008 PIM operated fully only for six months in a year on difficulty in securing gas basic material.

PIM is responsible for supplying urea fertilizer for Aceh and other regions in Sumatra ncluding North Sumatra, Riau and Jambi.

Shortage in gas supply remains the main problem

Indonesia uses natural gas mainly to generate energy and as feedstock for chemical fertilizers. Hydrogen from its methane gas will combine in a synthetic reaction with nitrogen from the air to turn out anhydrate ammonia, which is used as the feedstock for fertilizer; Gas is the main element in the urea production cost accounting for 50%-60% of the total production cost of urea fertilizer. Therefore, the availability of gas is the most important factor for the sustainability of urea fertilizer industry.

The problem often faced by fertilizer producers are over gas price and supply. Gas is needed by producers of nitrogen-based fertilizers such as Urea, ZA and NPK. Fertilizer producers could not buy gas at market prices as the selling prices for their fertilizer products are set by the government more often below the prevailing market prices. The price problem is more difficult especially with the soaring prices of oil and gas in the world market.

Shortage in gas supply has plagued the country's fertilizer industry in the past several years resulting in some producers suspending operation and slowing down production. However, by the end of 2009, the government managed to arrange supply to meet the fertilizer industry's gas requirement.

A number of sales and purchases agreements were signed such as between Kodeco Energy and PKG in East Java. The agreement was for a year under which Kodeco is to sell 5.168 trillion British Thermal Unit (BTU) of gas in 2010 from PKG. Similarly, PT Pertamina EP signed a 2-year contract worth US$ 284.48 million with PKC, Karawang, and West Java for 3.65 TBTU of gas starting 2010.

Pusri has 15-year contract with PT. Medco E&P Indonesia, which will supply 45 billion British thermal units (BBTU) per day starting January 2008 for the fertilizer producer. The contract is valued at US$ 866.3 million.

Medco will supply gas from its gas field in South & Central Sumatra Extension (SSE) block, through a 130 kilometer pipeline of Pertamina to Pusri's factory in Palembang,

Pusri, however, is feared to meet problem after 2012 as Pertamina EP said it could no longer supply gas to Pusri in line with its contract. Its said its gas production from its gas fields in Sumatra is dwindling. The contract to supply gas 180 mmscfd for Pusri IB, III and IV by Pertamina is only until 2012.

Pusri will receive gas supply of 180 mmscfd for 5 years starting 2012, when the present contract expires. Pusri, however, still needs additional supply of around 313 mmscfd after revitalization.

Extension of contract with Pertamina for gas supply of 166 mmscfd is expected only for 5 years and the supply is yet to be determined after sub surface study. In connection with its revitalization program Pusri will build its new factories in gas producing areas such as Senoro in Southeast Sulawesi, Binuti in Papua or Masela in Southeast Maluku. Gas supply for Pusri will be better guaranteed in those locations. Pusri will need 313 MMscfd of gas after the revitalization.

PKG is facing gas supply crisis in 2010-2011 with the dwindling gas output from the Pagerungan wells of Kangean Energy Indonesia Ltd, (KEI) and the termination of gas supply contracts.

Contract with Kodeco Excess Gas and Perusahaan Gas Negara (PGN) will expire in October 2010, and with Kodeco Existing Gas will end in May 2011. Therefore, it is feared that starting November 2010 until Dec. 2011, there will be shortage in gas supply. The shortage will likely force the company to suspend the operation of its urea fertilizer plant.

PKG hopes to forestall the problem with conversion coal energy, by seeking additional gas supply from Kodeco and renew contract with Kodeco, PGN and KEI. However, extension of gas supply would solve its problem because of the increase in gas price. KEI asks for an increase in the price of its gas from Pagerungan from US$ 2 and US$ 2.75 to US$ 4.5 per MMBTU. The price of gas from the Terang Sirasun Batur (TSB) well is raised from US$ 3.8-US$ 3.9 to US$ 5.6-US$ 6.5 per MMBTU; PKG needs around 70 million cubic feet per day (MMSCFD) as feedstock to produce urea fertilizer.

Meanwhile, PIM, which still relies on gas under swap arrangement with PKT, will has gas supply from Petronas Petroliam National Berhard of Malaysia to feed its second factory PIM 2 at a price of US$18 per million Btu (British thermal unit), PIM has signed a long term contract from 2010 to 2020 with Medco E&P.

Medco E&P will share gain from any increase in the price of fertilizer to more than US$ 360 per ton sold by PIM. PIM will have a 60% and Medco a 40% share of the excess outside the basic price of US$5 per MMBTU.

PIM will be supplied with gas by Exxon Mobil Oil for two years at a price of US$ 3.3--US$ 3.5 per BTU. In 2009, supply for PIM totaled 16,834,800 MMBTU, equivalent to 5.45 cargoes of LNG.

PKC has secured a 2-year contract for gas supply of 62.27 trillion British Thermal Unit (BTU) from BP Offshore North West Java, PKC secured gas supply from BP Indonesia early January 2007, after contract with Pertamina ended in April 2006. PKC has contract for 135 Billion British Thermal Unit (BBTU) in the period of 2007-2017.

Gas supply has yet to be secured for Petrokimia Gresik as supply from EMP Kangean is shrinking 5 mmscfd per month. PT Petrokimia Gresik receives gas supply from Kodeco Energy Co Ltd. Supply to Petrokimia Gresik totaled 26.3 trillion British Thermal Unit (TBTU) as from January 2007. Sales and purchase contract between Kodeco and Petrokimia Gresik will be effective until 2011 valued at US$ 120.81 million.

PKT has signed agreements to secure gas supply for 2010 with producers in East Kalimantan such as Pearloil (Sebuku) Ltd, Total EP Indonesie, and Inpex Corporation. PKT buys gas at a price of US$ 5.5 per MMBTU. PKT needs gas around 275 million metric square cubic feet per day (MMSCFD).

Prospects of fertilizer exports until 2010

Fertilizer exports depend largely on production and domestic consumption as generally the government allows exports only when domestic requirement has been fulfilled.

The government banned fertilizer exports in April 2006 through April 2007 because of deficit in the domestic supply as a result of shrinking production when demand for urea fertilizer rose in the country. In April 2006, the government banned fertilizer exports that exports in 2006 totaled only 65,456 tons.

High demand for fertilizers in the world in 2007, and substantial surplus of fertilizers in his country that year prompted the government to allow exports. Exports of fertilizers in 2007 reached 718,668 tons after additional export quota allowed by the government from only 512,000 tons in the previous year.

In 2008, fertilizer exports dropped 38.4% to only 226,676 tons because of growing domestic requirement.

PKT the largest fertilizer exporter

Based on a decision of the agriculture minister No. 05 of 2009 on subsidized urea fertilizer for food crops in 2009 planting season, allocation of urea fertilizer for domestic consumption totaled 5.5 million tons. Until April 2009, only 1.54 million tons of the subsidized urea fertilizers were used.

In the whole of that year consumption of subsidized fertilizer was estimated to reach only 4.86 million tons resulting in large stocks of 638,000 tons of urea fertilizer. The large stocks needed high cost of storage to be paid by the producers.

The country's fertilizer requirement in 2009 reached 5.5 million tons, and the production was estimated at 7.3 million tons adding to large surplus. The low consumption of urea fertilizer added to stock in the district areas. Until April 2009, there was a stock of around 930,000 tons of urea held in district areas. Pupuk Kaltim held 600,000 tons and Pusri and Petrokimia Gresik held the rest.

The total stocks of urea fertilizer in PKT included 180,000 tons in its storehouse and the rest or 420,000 tons in the provincial and district storehouses. The swelling stocks were caused more by decline in the consumption by the food crop sector as many farmers were forced to delay planting because of changing climate. Meanwhile, fertilization in the plantation sector also declined as a result of the falling prices of commodities like CPO.

In September 2009, the government through the trade ministry issued license for the exports of 478,000 tons of urea fertilizer until 31 December 2009. The export quota was split between PT Pupuk Sriwijaya (Pusri) with allocation of 196,000 tons, PT Petro Kimia Gresik (PKG) 16,000 tons, PT Pupuk Kujang (PKC) 58,000 tons, and PKT 208,000 tons.

The producers could not export their entire surplus. PKT was allowed to export only 208,000 tons although it could have exports as much as 400,000 tons. Producers have to give priority to domestic supply. In line with a decision of the Agriculture Minister each producer of fertilizer is required to keep stock of 500,000 tons, and in October-December 2009 the stock could be increased by 100,000 tons to guarantee domestic supply.

The government planned to extend the export license until 2010, but only for the remaining for 2009. There has been no export quota for 2010. PIM which had an export quota of 800,000 tons for 2008 still had 300,000 tons not yet exported until 2009.

Imports of fertilizers fluctuating

Indonesia's imports of fertilizers are dominated by chemical fertilizers like Kalium Chlorida (KCL), Triple Superphosphate (TSP), and Ammonium Sulfate (ZA) and NPK (Nitrogen-Phosphor-Kalium), which are not produced or not sufficiently produced in Indonesia.

Imports of urea are relatively small as it is already produced sufficiently in the country. Imports of urea totaled only 1,800 tons in 2007.

Potassium Chloride (KCL) is not yet produced in Indonesia. Its imports reached 1,382,166 tons in 2007.

In 2005, imports of fertilizer and fertilizer basic materials totaled 2,251,625 tons, up to 3,245,668 tons in 2006 but fell in 2007 to 2,910,597 tons.

In 2008, imports rose again to 4,341,000 tons valued at US$ 2.2 billion. The increase followed the soaring prices of plantation commodities. Many farmers and plantation companies expanded heir plantations requiring larger supply of fertilizers. Fertilizers account for 60% of the production cost of a plantation company.

In 2009, imports of fertilizers dropped sharply to 1,791 tons valued at US$ 604 million. The decline followed a fall in the prices of farm commodities and an increase in the country's production of NPK.

Early 2009, the government imported 500,000 tons of urea fertilizer by PKG and PKC each importing 250,000 tons. The imports were to strengthen short term stocks to forestall possible deficit in domestic supply.

Urea dominates domestic fertilizer consumption

Urea still dominates the domestic consumption of fertilizers. In 2007, consumption of urea reached 5,602,659 tons, up to 5,669,951 tons in 2008 but down slightly to an estimated 5,500,000 tons in 2009.

Urea fertilizer consumption has relatively been stable over the past years with only a slight increase every year as the government has encouraged the use of NPK, which has greater efficacy in improving productivity.

Meanwhile, demand for NPK has increased rapidly in the country in the past three years--from 190,000 tons in 2006 to 732,519 tons in 2007.

Demand for NPK continued to rise up 30.4% to 1.2 million tons in 2008, but fell again to 852,742 tons in 2009.

The largest consumer of urea fertilizer is the food crop sector which accounted for 2,795,000 tons or 62.1% of the total consumption of that fertilizer in Indonesia in 2008. The second largest users are smallholder plantations accounting for 948,745 tons or 21.1% of the total urea consumption in 2009.

Food crop sector including rice and corn farms are also large users of SP-36, ZA and NPK fertilizers.

Food crop sector accounted for 75.7% of the country's total consumption of SP-36. The food crop sector and smallholder's plantation sector respectively accounted for 297,870 tons and 278,993 tons of ZA fertilizers.

Food crop sector also the largest user of NPK accounting for 63.7% of the total consumption of NPK in the country.

Food crop plantations

The food crop plantations in the country have not expanded significantly over the past five years despite the growing consumption of fertilizers in the country.

The increase in fertilizer consumption has been recorded mainly in the horticulture and plantation sectors.

Rice fields expanded only slightly by 2.7% to 11.5 million hectares in 2009 from 11.3 million hectares in 2008. Plantation areas expanded significantly notably oil palm plantations ... Oil palm plantations expanded from 7 million hectares in 2008, to 7.3 million hectares in 2009. The rapid expansion of plantations was attributable mainly to oil palm plantations. Growing demand for CPO both as food basic material and bio-fuel feedstock prompted the expansion. Similarly, cacao and sugar plantations have expanded although not as fast as oil palm plantations.

Fertilizer subsidy continues to increase

The fertilizer subsidy budget set by the government has surged from year to year. In 2005, the subsidy on fertilizer was Rp 2.5 trillion, up to Rp 5.8 trillion in 2007 to Rp 15 trillion in 2008. The sharp rise in 2008 followed soaring price of gas resulting in an increase in the price of ammonia the main basic material of urea fertilizer. In 2008, the subsidy on fertilizers was set at Rp7.8 trillion.

The increase in the retail prices of fertilizers, therefore, is unavoidable especially with the growing demand from the plantation sector. In 2009 the subsidy on urea fertilizer shot up to Rp17.6 trillion.

In 2010, the fertilizer subsidy is expected to rise further to Rp19.3 trillion based on the revised budget bill. Around 62.34% of the fertilizer subsidy would be for food crop sector, 25.25% for plantation sector, 9.41% for horticulture sector and the rest for the animal husbandry and fishery sectors.

In 2010, the agriculture ministry allocates 6 million tons of subsidized urea fertilizer, 2.2 million tons of NPK, 1 million tons of SP 36, 950,000 tons of ZA and 910,000 tons of organic fertilizers.

The government increased the budget for subsidized organic fertilizers in 2010 as consumption of organic fertilizers is expected to rise sharply to around 12 million tons in 2010. The consumption is expected to scale up further to 15 million tons in 2015. Considering the limited availability of gas basic material for urea fertilizer, the government encourages the use of organic fertilizers. Currently organic fertilizers are produced in the form of granule. The granule form makes it easier for the farmers in the application of the fertilizers Subsidy on organic fertilizers was first given in 2008 for 385,000 tons, up to 450,000 tons in 2009. Subsidy was provided through state companies like PT Pusri, PT Pertani, PT Sang Hyang Seri, and PT Petroganik,

Highest retail price of fertilizer unchanged

In line with the regulation of the Agriculture Minister No, 17/SR, 130/5/2006, the highest retail prices (HET) of subsidized fertilizers were set at Rp 1,200/kg for urea, Rp 1,550/kg for SP-36, Rp 1,050/kg for ZA and Rp 1,750/kg for NPK. The HET remained the same until 2009.

In 2009, subsidy was given for 5.5 million tons of urea fertilizer out of requirement of 6.31 million tons. The subsidy was given for 1 million tons of SP-36 fertilizer out of requirement of 3.13 million tons; for 920,000 tons of ZA fertilizer out of requirement of 1.56 million tons; for 1.5 million tons of NPK fertilizer out of requirement of 3.05 million tons and for 450,000 tons of organic fertilizers out of requirement of 4,67 million tons.

In 2010, the subsidy of Rp19.3 trillion is expected to be enough for fertilizer requirement of 11.06 million tons with fertilizer HETs raised 40%-80% as from April 2010. It is estimated HET of fertilizers/kg will rise to Rp 1,800 for urea, to Rp 1,650 for ZA, Rp2, 200 for SP36, to Rp 2,450 for NPK and to Rp750 for organic fertilizers. If the government decides not to raise the HET it would have to provide larger subsidy reaching around Rp23.4 trillion for the same quantity of fertilizer.

Characteristics of fertilizer trade

Fertilizers are strategic commodities in the country as they are vitally needed for the farm and plantation sector.

Fertilizer trade and distribution, therefore, are generally regulated by the government.

There are two types of fertilizers including subsidized fertilizers and non-subsidized fertilizers. Subsidized fertilizers are ones the procurement and distribution of which are regulated with HET set by the government. Non-subsidized fertilizers are ones the trading of which is not regulated with no HET.

Since January 2009, the government changed the distribution system for subsidized fertilizers from open to close system. Under close system, the central government or the regional offices of the agriculture ministry gave subsidized fertilizers directly only to groups of farmers, which sent proposal called Definitive Plan of Working Group (RDKK). In order to make it easier distribution under close system, the Agriculture Ministry would identify the recipients of the fertilizers. The identification is made in cooperation with the local office of the agriculture ministry.

With the open system as adopted before, small and poor farmers did not benefit from subsidized fertilizers as the kiosks selling subsidized fertilizers could to sell the fertilizers to anyone.

Distribution system

The country has 679 distributors of subsidized fertilizers registered at the five fertilizer producers in line with the regulation of the trade minister No.21/M-DAG/PER/6/2008 on the procurement and distribution of subsidized fertilizer.

The producers of subsidized fertilizers include PT Pupuk Kaltim, PT Pupuk Sriwijaya, PT Pupuk Kujang, PT Petro Kimia Gresik, and PT Pupuk Iskandar Muda.

The registered distributors distribute subsidized fertilizer in their respective areas among retailers, which are also registered.

Java, mainly West Java, Central Java and East Java, accounts for 60% fertilizer consumption in the country.

In 2009, the country had large stocks of fertilizer. In January, the stocks were estimated to reach 827,201 tons. In February, the stock declined to 775,121 tons, and in March, the stock fell again to 367,500 tons, but still far above the minimum limit set by the Agriculture Minister.

Meanwhile, subsidized fertilizers used in 2009 were only 89% of the total target set by the government and fertilizer requirement in 2009, based on the regulation of the Agriculture Minister was 5.2 million tons. However, consumption in the first 10 months of 2009 totaled only 3.45 million tons or 81%. Until December, 2009, fertilizer consumption reached only 4.63 million tons, and fertilizer not used reached 570,000 tons. Including 300,000 tons held early that year, the stocks totaled 870,000 tons by the end of that year.

Scarcity in supply of subsidized fertilizers has been caused by an increase in requirement and inefficient distribution system of subsidized fertilizer as retailers were free to sell subsidized fertilizers to any farmers or buyers outside their areas. The high price disparity prompted the rampant illegal practice among the retailers.

Distributors and retailers of subsidized fertilizers were given only a margin of Rp 30-Rp 40 per kg.

Similarly, Java is the largest consumer of SP-36 fertilizer. See the following table.

Distribution of ZA fertilizer in East Java is much larger than in other provinces including Central Java and West Java. In 2006 East Java accounted for 44.1% of the country's total consumption of ZA fertilizer.

NPK fertilizer is relatively small in production and consumption compared to other types of fertilizer, but the trend is increasing since 2007, while consumption of other fertilizers remained almost stagnant. Increase in NPK consumption followed the capacity expansion of the producers in 2008 and the growing use in the food crop and horticulture sectors.

New Investment

Under the program of revitalization, fertilizer producers expanded their production capacity and improved efficiency to contribute to strengthening the country's food resilience.

PT. Fertilizer Kujang has expanded its capacity for NPK granule by 100,000 tons per year. The new production facility, which was built with an investment of Rp55 billion already started operations in 2009.

PT. Petrokimia Gresik (PKG) is modifying its factory as it plans energy conversion using coal to generate 25 MW of electricity. The conversion project will cost around US$60 million to be completed this year.

PKG also plans to build a new urea plant with a capacity of 1.5 million tons and an ammonia plant with a capacity of 2,000 tons per day. The project will cost around US$500 million to be completed in 2011.

Pusri will build 3 NPK factories with an investment of US$ 6 million per unit. Each of the factories will have a capacity of 1,100 tons per day. They are to start operation in 2011. Pusri also plans to build new urea factories--Pusri II B, III B and IV B--each with a production capacity 6,000 tons of urea per year. The three factories are to start operation in 2012.

Government policy

Based on a decision of the Trade minister No 21/M-DAG/Per/6/2008 fertilizer producers are required to give priority to procurement and distribution of subsidized fertilizers for the farm sector. Producers are required to report their fertilizer procurement plans for three months to come.

The producers are allowed to import if domestic procurement is not enough to meet domestic requirement with volume to be approved by the trade ministry. Imports must meet the stipulations of the regulation of the trade minister on the Indonesian National Standard (SNI) as outlined in the regulation of the trade minister No.14/2007.

The government also has standardized services in trade sector and supervision of SNI for traded goods and services. Currently 41 of 60 fertilizer importers hold SPPT-SNI issued by the Appropriateness Appraisal Agency.

However, distribution of non-subsidized urea fertilizer and NPK is not restricted with regionalization.

In a bid to improve productivity the government encourages the use of multi-element fertilizer (NPK) as single-element fertilizers (Urea, ZA, and SP-36) is no longer effective in improving productivity.

The trade minister through a decision No 07/M-DAG/PER/2/2009 regulates fertilizer distribution areas. Currently distribution areas for subsidized urea fertilizers of PT Fertilizer Kujang cover 23 regencies/cities including three regencies/cities in West Java (Bogor, Sukabumi, Cianjur, Bandung, Garut, Cirebon, Sumedang, Indramayu, Subang, Purwakarta, Karawang, Bekasi, Bandung Barat, Cimahi, Depok), and 3 regencies/cities in Central Java (Tegal, Brebes).

PT Fertilizer Iskandar Muda (PIM) is responsible for urea fertilizer distribution in Aceh (NAD) and North Sumatra. PT Fertilizer Sriwidjaja (Pusri) is responsible for distribution in West Sumatra, Jambi, Riau, Bengkulu, South Sumatra, Bangka Belitung, Lampung, Banten, Jakarta, Central Java, Yogjakarta and West Kalimantan.

The distribution areas of PT Fertilizer Kaltim (PKT) include Bali, NTB, NTT, Central Kalimantan, South Kalimantan, East Kalimantan, North Sulawesi, Central Sulawesi, Southeast Sulawesi, Gorontalo, South Sulawesi, Maluku, North Maluku and Papua. See the following map.

[ILLUSTRATION OMITTED]

Prospects and Conclusion

On 2011, the country's fertilizer production is expected to increase considerably with the operation of new factories. The country's production capacity will increase for both urea and NPK fertilizers in 2011.

However, there is no expansion of the production capacity for SP-36 and ZA fertilizer expected in the near future as demand for the two types of fertilizers is relatively small.

The production of urea is predicted to raise form an estimated 7.3 million tons in 2010 to 14.6 million tons in 2014. The production of SP36 fertilizer is forecast to increase to 4.5 million tons, ZA to 2.2 million tons and NPK to 6 million tons in 2014.

Demand for multi-element fertilizer (NPK) is expected to grow faster replacing single-element fertilizers (Urea, SP-36, and ZA).

Wider use of NPK will also help reduce the dependence on gas, which is used as the basic material for urea.

This year urea fertilizer requirement is forecast to rise to 6.7 million tons and it is predicted to increase further to 8.6 million tons in 2014. Meanwhile, demand for NPK is forecast to reach 3.8 million tons in 2010 up to 4.8 million tons in 2014.

Food crops are still his largest users of fertilizers in Indonesia, although the expansion of food crop plantations is slower.

Fertilizer production could be increased to keep pace with the growing consumption in the country if the expansion of fertilizer industry is not hampered by problems such as shortage in supply of gas basic material.

Additional gas supply needed after the revitalization of the fertilizer industry will reach 509 MMSCFD, bringing the total requirement to 981 MMSCFD. The government has asked producers to guarantee supply of gas for domestic consumption for 20 years.
Table--1
Fertilizer production capacity, 2004--2008
(Tons)

 Non Urea
Year Urea
 ZA TSP/SP-36 NPK

2004 7,517,000 650,000 1,000,000 360,000
2005 8,030,000 650,000 1,000,000 460,000
2006 8,030,000 650,000 1,000,000 460,000
2007 8,030,000 650,000 1,000,000 910,000
2008 7,870,000 650,000 1,000,000 910,000
2009 8,043,000 650,000 1,000,000 1,010,000

Source : PT PUSRI, PT PKG, PT PKC, PT PKT, PT PIM

Table--2
Fertilizer production capacity by companies, 2010

 Installed
Companies Factory names Products capacity
 (tons/year)

PT Pupuk PUSRI I*) Urea 100,000
Sriwijaya PUSRI II Urea 380,000
 PUSRI III Urea 570,000
 PUSRI IV Urea 570,000
 PUSRI II **) Urea 190,000
 PUSRI IB Urea 570,000
 Sub total 2,280,000

PT Petro ZA-I ZA 200,000
Kimia Gresik ZA-II ZA 250,000
 ZA-III ZA 200,000
 Sub total ZA 650,000

 SP36-I Super Phosphate 500,000
 SP36-II Super Phosphate 500,000
 Sub total SP-36 1,000,000

 Urea Urea 460,000
 Sub total Urea 460,000

 Ponska NPK 750,000
 NPK Blending NPK 60,000
 NPK Granulasi NPK 100,000
 Sub total NPK 910,000

 Fertilizer Organic Organic 3,000
 fertilizers
PT Pupuk Kujang I Urea 570.000
Kujang Kujang I B Urea 570.000
 NPK 400.000
 Ammonia 660.000
 Sub Total 2.200.000

PT Pupuk Kaltim I Urea 700.000
Kaltim Kaltim II Urea 570.000
 Kaltim III Urea 570.000
 Popka Urea Granule 570.000
 Kaltim IV Urea Granule 570.000
 Sub Total 2.980.000
 Ammonia 1.850.000

PT Pupuk PIM I Urea 600.000
Iskandar Muda PIM II Urea Granule 570.000
 Sub Total 1.170.000

Source : PT Pusri, Agriculture ministry

Note : *) Pusri 1 replaced with Pusri 1B
 **) Expansion of capacity PUSRI II

Table--3
Production facilities of PUSRI

Pusri's Ammonia Urea Factory
Factories installed installed complex
 capacity capacity (ha)
 (tons) (tons)

 I (*) 180/day 100,000 20

 II (**) 445,500 570,000 15
 III 262,000 570,000 10
 IV 396,000 570,000 10
 IB 396,000 570,000
4 Factories 1,499,500 2,262,000 55

Pusri's Factory Start-up
Factories value (US$) Production

 I (*) 34,363,511 + Oct-63
 Rp 3,651,063,140
 II (**) 85,734,452 Aug. 1974
 III 192,000,000 Dec-76
 IV 184,372,772 Oct-77
 IB 326,883,626 Mar-94
4 Factories 823,354,361 +
 Rp 3,651,063,140

(*) Pusri I replaced with Pusri IB for being too old and not efficient

(**) Already being optimized, see original design in Profile of Pusri
II

Table--4
Production of fertilizers, 2005-2009

 Urea ZA

Year Production Capacity Production Capacity
 (Tons) utilization (Tons) utilization
 (%) (%)

2005 5,848,655 72.8 644,320 99,1
2006 5,654,692 70.4 625,000 96,2
2007 5,865,856 73.1 652,486 100,4
2008 6,213,286 78.9 692,604 106,6
2009 6,856,841 85.3 767,837 118.1

 SP 36 NPK

Year Production Capacity Production Capacity
 (Tons) utilization (Tons) utilization
 (%) (%)

2005 819,704 82 276,876 60.2
2006 648,499 64.9 412,663 89.7
2007 660,653 66.1 746,347 82.2
2008 488,847 48.9 1,194,984 131.3
2009 742,986 74.3 1,500,000 148.5

Source: Agriculture ministry

Table--5
Production of urea fertilizer by producers, 2005-2008
(Tons)

 Producers 2005 2006 2007

PT. Pusri 2,045,860 2,051,250 2,020,760
PT. Pupuk Kujang 537,563 851,579 874,104
PT. Pupuk Kaltim 2,665,021 2,214,961 2,344,719
PT. PIM 195,847 205,225 244,428
PT. Petrokimia Gresik 404,364 331,677 381,845

Total 5,848,655 5,654,692 5,865,856

 Producers 2008 2009

PT. Pusri 1,950,310 2,026,710
PT. Pupuk Kujang 1,045,223 990,054
PT. Pupuk Kaltim 2,552,012 2,949,750
PT. PIM 251,891 390,486
PT. Petrokimia Gresik 413,850 499.841

Total 6,213,286 6,856,841

Source : Agriculture ministry/APPI

Table--6
Gas supply needed by fertilizer producers, 2010

Fertilizer Gas Suppliers Price
companies requirement (US$/MMBTU)

PUSRI 225,5 MMCFD Pertamina (180 MCFD) 4.0
 Medco (45 MMCFD) 3.6
PKT 285 MMCFD Total EP Indonesi, 5.5
 Pearloil (Sebuku)
 Ltd, Inpex
 Corporation
PKC 108 MMCFD Pertamina
PKG 65 MMCFD Kodeco, Kangean 4.5
PIM 110 MMCFD ExxonMobil 4--5

Source: PUSRI (Holding)

Table--7
Indonesia's fertilizer exports, 2004--2008

Year Volume (tons)

2004 448,559
2005 691,907
2006 650,456
2007 713,115
2008 226,676

Source: Trade ministry

Table--8
Exports of urea fertilizer by producers, 2009

Producers Volume exports
 (000 tons)

PT Pupuk Kalimantan Timur 208
PT Pupuk Sriwijaya 196
PT Pupuk Kujang 58
PT, Petrokimia Gresik 16

Total 478

Source: Trade ministry

Table--9
Imports of fertilizers and fertilizer basic materials, 2005-2009

Year Volume (tons)

2005 2,251,625
2006 3,245,668
2007 2,910,587
2008 4,341,000

Source : Central Bureau of Statistics (BPS)

Table--10
Fertilizer requirement, 2005-2008

 Urea ZA

Year Requirement Growth Requirement Growth
 (tons) (tons)

2005 4,159,396 -- 476,000 --
2006 4,409,818 6,02 551,000 15,76
2007 5,602,659 27,0 745,378 35,3
2008 5,669,951 1,2 775,983 4,1
2009 5,500,000 -2,9 743,209 -4,2

 SP-36 NPK

Year Requirement Growth Requirement Growth
 (tons) (tons)

2005 722,300 -- 155,000 --
2006 682,700 -5,48 190,000 22,58
2007 802,812 17,6 732,519 335,5
2008 585,883 -37,0 1,175,027 30,4
2009 1,908,089 325,7 852,742 -27,4

Source : Agriculture Ministry /APPI

Table--11
Fertilizer consumption by sectors, 2008
(Tons)

Sectors Urea TSP/SP ZA NPK
 36

Food crop 2,795,000 461,367 297,870 445,585
Horticulture 396,326 39,173 121,475 62,809
Smallholder plantations 948,745 240,925 278,993 191,605
Animal husbandry 12,699 1,079 1,661 0
Fish breeding 147,231 57,456 0 0
Stocks 200,000 0 0 0
Total 4,500,000 800,000 700,000 700,000

Source: Agriculture Ministry

Table--12
Expansion of farm and plantation areas, 2005-2009
(Hectares)

Crops 2005 2006 2007

Food crop
1. Irrigated rice fields 10,733,576 10,713,014 11,041,225
2. Dry rice fields 1,105,484 1,073,416 1,073,416
3. Total rice fields 11,839,060 11,786,430 12,114,641
4. Corn fields 3,625,987 3,345,805 3,630,324

Horticulture
1. Chili 187,236 204,747 204,048
2. Onion 83,614 89,188 93,694
3. Potato 61,557 59,748 62,375
4. Cabbage 57,765 57,732 60,711

Plantation
1. Oil palm 5,597,158 5,785,505 6,766,836
2. Cacao 992,448 1,004,470 1,379,279
3. Sugarcane 382,083 406,852 427,799
4. Tobacco 208,209 206,624 198,054

Crops 2008 2009

Food crop
1. Irrigated rice fields 11,257,753 11,595,661
2. Dry rice fields 1,069,672 1,073,328
3. Total rice fields 12,327,425 12,668,989
4. Corn fields 4,001,724 4,096,838

Horticulture
1. Chili 202,712 N,a
2. Onion 91,780 N,a
3. Potato 62,650 N,a
4. Cabbage 60,821 N,a

Plantation
1. Oil palm 7,007,876 7,321,897
2. Cacao 1,473,259 1,592,983
3. Sugarcane 436,505 443,832
4. Tobacco 196,627 202,453

Source: Agriculture Ministry

Table--13
Budget for fertilizer subsidy
2006-2010

Year Subsidy (Rp trillion)

2006 3
2007 5.8
2008 15
2009 17.6
2010 19.3

Source: Agriculture Ministry

Table--14
HET of fertilizers, 2006-2010

(Rp/Kg)

Year Urea ZA SP36 NPK

2006 1,200 1,050 1,550 1,750
2007 1,200 1,050 1,550 1,750
2008 1,200 1,050 1,050 1,750
2009 1,200 1,050 1,050 2,854
2010 * 1,800 1,650 2,200 2,450

Source: Agriculture Ministry

Note * : estimate

Table--15
Distribution of subsidized urea fertilizer in main regions, 2008-2009

(Tons)

 Provinces 2008 2009

East Java 1.300.000 1.325.000
Central Java 950.000 1.070.000
West Java 900.000 900.000
South Sulawesi 300.000 350.000
Lampung 295.000 355.000
North Sumatra 200.000 220.000
South Sumatra 223.000 230.000
Lain-lain 1.332.000 1.550.000
Total 5.500.000 6.000.000

Source : Food crop directorate general, Agriculture Ministry

Table--16
Distribution of subsidized SP-36 fertilizer in main regions, 2008-2009

(Tons)

Provinces 2008 2009

East Java 200.000 200.000
Central Java 180.000 180.000
West Java 180.000 180.000
South Sulawesi 50.000 50.000
Lampung 50.000 50.000
North Sumatra 40.000 48.000
South Sumatra 50.000 50.000
Lain-lain 250.000 242.000
Total 1.000.000 1.000.000

Source: Agriculture Ministry

Table--17
Distribution of subsidized ZA fertilizer in main regions, 2008-2009

(Tons)

Provinces 2008 2009

East Java 400.000 421.994
Central Java 200.000 208.228
West Java 100.000 74.027
South Sulawesi 60.000 62.195
Bali 11.000 11.649
DI Yogyakarta 15.000 15.439
North Sumatra 50.000 61.755
Lain-lain 87.000 94.713
Total 923.000 950.000

Source: Agriculture Ministry

Table--18
Distribution of subsidized NPK fertilizer in main regions, 2008-2009

(Tons)

Provinces 2008 2009

East Java 320.000 466.667
Central Java 260.000 350.667
West Java 150.000 294.933
South Sulawesi 65.000 86.667
Lampung 90.000 120.000
North Sumatra 80.000 110.000
South Sumatra 80.000 93.333
Lain-lain 455.000 677.733
Total 1.500.000 2.200.000

Source: Agriculture Ministry

Table--19
New investment projects, 2009 -2012

 Companies Projects Production Operation
 (tons/year)

PT. Fertilizer NPK factory NPK granule-- 2009
Kujang 100,000

PT. Petrokimia a. Conversion To generate 25 2010
Gresik of energy into MW of power
 coal

 b. Urea Urea--1,5 2011
 factory urea million

 c. Ammonia Ammonia-
 plant 1,100 tons per 2011
 day

PT. Fertilizer a. NPK factory -- 2010
Kalimantan expansion
Timur
 b. PKT V Urea -960.000 2011

 c. Expansion -- 2011
 of coal boiler

PT. Pusri a. NPK NPK--1,100 2011
 factories tons per day

 b. Pusri II B, Urea- 6,000 2012
 III B and IV B

 Companies Investment Description

PT. Fertilizer Rp 55 billion
Kujang

PT. Petrokimia US$ 60 million
Gresik

 N.a Total investment
 US$ 500 million
 for urea and
 ammonia plants

 N.a

PT. Fertilizer US$ 20 million
Kalimantan
Timur
 US$ 80 million

 US$ 120 Fund from bond
 million sales (30%) BRI
 loan (70%)

PT. Pusri US$ 6 million To build 3
 per unit factories

 N.a

Source: ICN processed

Table--20
Projected production of fertilizers, 2010-2014
(Tons)

Year Urea SP-36 ZA NPK Total

2010 7,300,000 1,000,000 900,000 2,200,000 11,400,000
2011 8,760,000 3,000,000 1,440,000 3,960,000 17,160,000
2012 10,687,200 3,900,000 1,728,000 4,752,000 21,067,200
2013 12,610,816 4,290,000 1,987,200 5,464,800 24,352,816
2014 14,628,559 4,633,200 2,185,920 6,011,280 27,458,959

Source: Agriculture ministry

Table--21
Projection of fertilizer requirement, 2010-2014

(Tons)

Year Urea SP-36 ZA NPK Total

2010 6,791,811 3,211,564 1,286,854 3,847,514 15,137,743
2011 7,204,172 3,409,330 1,373,281 4,064,932 16,051,715
2012 7,646,420 3,621,412 1,466,379 4,295,789 17,030,000
2013 8,121,050 3,848,990 1,566,721 4,539,004 18,075,765
2014 8,630,787 4,093,359 1,674,929 4,801,567 19,200,642

Source: Agriculture ministry
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Title Annotation:INDUSTRY PROFILE
Comment:Fertilizer industry facing shortage in gas supply 2010.(INDUSTRY PROFILE)
Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Feb 1, 2010
Words:9469
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