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Pupuk Sriwidjaja, a state-owned fertilizer maker, plans to build three plants that will produce fertilizer, helping to meet demand in Indonesia’s growing agricultural industry.

The company plans to build plants in Gresik and Bojonegoro in East Java at a total estimated cost of $1.3 billion, and a third plant will be located in Bontang, East Kalimantan, costing Rp 5 trillion ($560 million), said Arifin Tasrif, president director of the company known as Pusri.

“Each plant will have a production capacity of 1 million tons,’’ Arifin said on Tuesday.

Arifin was speaking on the sidelines of the Food Security Summit in Jakarta.

The fertilizer plants in Bojonegoro and Gresik will help meet demand from consumers on the densely populated island of Java. Currently, fertilizer on Java is supplied by the company’s two plants in East Kalimantan and on Sumatra, and the costs for shipment from the islands typically causes prices to increase.

A lack of decent infrastructure has hampered economic growth in the country and has also tended to push up distribution costs.

Arifin said the three plants are expected to start production in 2016. If gas supplies are sufficient, the company could start construction on the plants next year.

The three plants will need a total combined 350 million standard cubic feet per day (mmscfd) in gas, and Pusri has secured total supplies of 255 mmscfd so far, Arifin said.

He said Pusri has signed a gas and sales agreement with Exxon Mobil, which operates the Cepu gas and oil block in Central Java.

For its current operations, Pusri is also seeking more gas supplies and is in talks with state oil and gas company Pertamina, Arifin said, but declined to disclose the nature of the talks. At present, Pusri needs 800 mmscfd of gas per year for production and has only 725 mmscfd.

“We want the government to provide more gas for the domestic market,’’ Arifin said.

Palembang-based Pusri was set up in 1958. It groups various fertilizer companies from across the archipelago, including Pupuk Gresik in Gresik; Pupuk Kujang in Cikampek, West Java; Pupuk Kalimantan Timur in Bontang, East Kalimantan; Pupuk Iskandar Muda in Aceh; and Rekayasa Industry in Jakarta.

Investor Daily