TEMPO Interactive, Jakarta: The government has confirmed that the construction of joint venture fertilizer factory in Iran by both Indonesia and Iran will be carried out by the end of 2007.
This was conveyed by Fahmi Idris, Industry Minister, after the signing of a Memorandum of Understanding (MoU) between PT Pupuk Sriwidjaja and National Petrochemical, Iran, last weekend in Jakarta.
Fahmi said that after the MoU finalization, it is expected that the factory construction can be realized soon.
“It is hoped that the project can be implemented by the end of the year,” he said.
Fahmi went on to say that the MoU between the governments had been signed in November, 2006.
The fertilizer factory will be built in Iran with fifty percent ownership belonging to each country.
The plan to build the fertilizer factory is based on the limitations of domestic gas supplies.
In Iran, said Fahmi, gas supplies are abundant and the price is far cheaper.
“The gas price in Iran is US$1 per mmBtu, here (Indonesia) fertilizer factories buy gas for US$4 per mmBtu,” he said.
The fertilizer factory, said Fahmi, will produce 990,000 tons of ammonia per year, with ammonia producing around 1.15 million tons of ures-based fertilizer.
He explained Iran will sell its gas at a price of US$1 for ten years to the joint fertilizer factory.
The source of funds to build the fertilizer factory in Iran, according to Fahmi, was the government’s capital investment and Pupuk Sriwidjaja’s internal funds.
“The amount (for 50 percent ownership) hasn’t been final yet, but it’s between US$200 million and US$250 million,” he said.
Dadag Heru Kodri, Pupuk Sriwidjaja’s Managing Director, said that the second point of the MoU iwa that each owner’s obligation is 50 percent.
According to him, in the MoU, his side had asked for the gas price to be US$1 with 10 years guarantee and 20 years of supply.
Alwi Shihab, the President’s special envoy for the Middle East, said that there are a number of financing organizations that support fertilizer factories.
“Among these is the Islamic Development Bank,” he said.
RR ARIYANI
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