PT Pupuk Kujang Cikampek and PT Pupuk Iskandar Muda (PIM), subsidiaries of fertilizer holding company PT Pupuk Indonesia, signed the deal for gas – a key ingredient in fertilizer production – with state-owned gas distributor PT Perusahaan Gas Negara (PGN) on Monday.

Under the agreement, PGN will sell gas to the two companies at US$6 per million British thermal unit (mmbtu), cheaper than the domestic market price of around $8 per mmbtu. The price adjustment has been mandated by Presidential Regulation No. 40/2016.

“This gas price adjustment completes a years-old issue over gas pricing and supplies for the fertilizer industry,” said Pupuk Indonesia president director Bakir Pasaman.

Pupuk Indonesia’s other subsidiary, PT Pupuk Sriwidjaja, had signed a similar deal in May.

Read also: 11 companies sign deals to buy gas at lower prices

The fertilizer producers are among more than 100 gas-hungry enterprises, including industrial heavyweights like Krakatau Steel and Unilever Indonesia, that receive cheaper gas as part of a government scheme to boost manufacturing sector growth.

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