The Ministry of State-Owned Enterprises (BUMN) underscores the crucial role of the petrochemical industry in boosting productivity and self-sufficiency in domestic fertilizer production.

Minister of State-Owned Enterprises Erick Thohir stated that while the upstream fertilizer industry is still not optimized compared to downstream fertilizer industries in Indonesia, currently ranked as the 6th largest globally, synergies between petrochemical and fertilizer inndustries need to be enhanced.

"Looking forward, fertilizer companies need to become integrated petrochemical companies from the upstream perspective," Erick Thohir said in Bontang on Thursday, February 29, 2024.

He emphasized that the integration of these two industries would demonstrate the significant and comprehensive benefits of downstream petrochemicals for the nation.

This synergy aligns with the petrochemical industry developments led by State energy company Pertamina. Additionally, Erick highlighted progress in integrating the two industries through the construction of the ammonium nitrate plant, which is projected to reduce the import rate of raw materials for the industry by 21 percent.

"We're not only increasing domestic production, with approximately 21percent still being imported, but also emphasizing that around 79 percent of the total demand of 560,000 tons is already produced domestically, with the remaining being imported," Erick said.

The ammonium nitrate plant, the first of its kind established by a State-Owned Enterprise (SOE) through a joint venture between PT Pupuk Kaltim and PT Dahana, PT Kaltim Amonium Nitrat (KAN), has a production capacity of 75,000 tons and is expected to reduce imports by 8 percent. The investment injected into the plant amounts to Rp1.2 trillion (US$76.4 million), covering an area of 6 hectares in the Industrial Estate Area (KIE) of Bontang, East Kalimantan.

"Furthermore, derivatives of nitric acid can be developed for defense industries and, of course, for the fertilizer industry itself," he added. Moreover, Erick reiterated the commitment to improving the fertilizer industry's supply chain, considering President Jokowi's directive to increase subsidized fertilizer volume from 4.7 million tons to 9.5 million tons.

"The need for raw materials will undoubtedly become increasingly important in the future," he concluded.