Pusri set to build two new fertilizer plants

Nani Afrida, The Jakarta Post, Jakarta, Tue, 03/23/2010 10:46 AM

PT Pupuk Sriwijaya (Pusri), the holding company of state fertilizer producers, will spend about US$1 billion to finance the construction of two new fertilizer plants in Sulawesi and Papua, a top executive has said.

Pusri’s president director Dadang S. Kodri said on Monday that the Sulawesi plant would be built near the Donggi-Senoro gas field, while the Papua would be constructed near the Tangguh gas field.

“We will spend up to $1 billion for the construction of the two plants,” he said during a visit to the Kujang fertilizer plant in Cikampek, West Java. Dadang said that the Sulawesi plants would produce urea fertilizer and the Papua plant would produce both urea and ammonia fertilizers.

He said that the construction of each plant take about 33 months to complete. “But we cannot not begin the construction until we receive a gas supply commitment from the government,” he added.

The country’s industrial sector has been hard hit by the acute shortage of natural gas. Indonesia is one of the world’s largest gas producers but most of its gas is exported in the form of LNG. Pertamina and its partners had planned to produce LNG from the Donggi-Senoro gas production for export markets. But the plan has been cancelled because the government wants the gas to be sold in the domestic market.

Pusri oversees four state fertilizer companies including PT Petrokimia Gresik in East Java, PT Pupuk Kujang in West Java; PT Pupuk Kaltim in East Kalimantan and PT Pupuk Iskandar Muda in Aceh. Pusri and its subsidiaries need at least 739 million standard cubic feet of gas per day (mmscfd) this year.

Pusri booked Rp 2.1 trillion in consolidated net profits last year. The company expected to increase net profits this year to Rp 2.5 trillion. This year, it plans to slightly increase urea production to 7 million tons from 6.8 million tons produced in 2009, as well as to increase its NPK fertilizer production to 2.2 million tons, about 70 percent higher than 1.3 million tons in 2009.

Indonesia is also importing to meet reported surging demand for fertilizer.