To finance the production activities and the distribution of the subsidized fertilizers, PIHC uses banking loans."Jakarta, May 8 (Antara) - As of now, the government still owes Rp16.7 trillion in unpaid fertilizer subsidy to PT Pupuk Indonesia Holding Company (PIHC), which is in charge of distributing subsidized fertilizers to consumers across the country.
"The unpaid subsidy worth Rp16.7 trillion is for the distribution of subsidized fertilizers for the period of 2012-2013. This should be billed," State-owned Enterprises (SOE) Minister Dahlan Iskan remarked after holding a meeting at the SOE building here on Thursday.
The minister stated that although PIHC had carried out its tasks, yet the government had not directly paid it, hence resulting in financial difficulties for the company.
Dahlan affirmed that the arrears resulted in interest burden and also caused obstacles in cash flow for the development of new investment.
Subsidized fertilizers contributed to 70 percent of the companys income, while non-subsidized ones contributed 30 percent. The contribution of subsidized fertilizers to the profit margin is only 28 percent.
According to PIHC President Director Arifin Asrif, the unpaid subsidy whose funds were derived from the state budget greatly hindered the companys operations.
"To finance the production activities and the distribution of the subsidized fertilizers, PIHC uses banking loans," he pointed out.
Arifin pointed out that every year, his company needed funding worth Rp10 trillion for capital expenditure and for business expansion plans.
He expressed hope that the payment of fertilizer subsidy will be discussed in the 2015 state budget.
(Uu.A014/INE/KR-BSR/F001)
Editor: Priyambodo RH
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