Indonesian distribution companies for subsidized NPK

Indonesian distribution companies for subsidized NPK : 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.