Jakarta, 18 December 2025 – The Government has officially enacted Presidential Regulation (Perpres) Number 113 of 2025 concerning the Amendment to Presidential Regulation Number 6 of 2025 on the Governance of Subsidized Fertilizers, as part of a reform of the fertilizer subsidy governance system to strengthen national food security and ensure the sustainability of the domestic fertilizer industry. This regulation provides a more adaptive policy framework for the implementation of fertilizer subsidies, while also opening opportunities to improve efficiency, strengthen raw material supply chains, and modernize the national fertilizer industry.

The Corporate Secretary of PT Pupuk Indonesia (Persero), Yehezkiel Adiperwira, stated that Pupuk Indonesia welcomes the implementation of Perpres 113/2025 as a strategic foundation to accelerate the company’s ongoing transformation agenda.
“Over the past several years, Pupuk Indonesia has adjusted its strategies by taking into account global raw material price volatility and the need to improve operational efficiency. The issuance of Perpres 113/2025 further strengthens the policy direction of this transformation,” said Yehezkiel.

He explained that most of Pupuk Indonesia’s production facilities have been operating for nearly 50 years, resulting in significantly higher raw material consumption—particularly natural gas—compared to global standards.

For example, the plant at Pupuk Iskandar Muda (PIM) requires approximately 54 MMBTU of gas to produce one ton of urea, while the global benchmark ranges between 23–25 MMBTU per ton. This condition has contributed to high production costs under the cost-plus subsidy scheme, in which all costs were charged to the Government.

“Through Perpres 113/2025, the cost-plus fertilizer subsidy scheme has been discontinued. Subsidies are now implemented using a marked-to-market (MTM) mechanism, which directly encourages efficiency and cost discipline at the producer level,” Yehezkiel explained.

Furthermore, Yehezkiel emphasized that Perpres 113/2025 plays a strategic role as a balancing point between fertilizer price affordability for farmers and the sustainability of the national fertilizer industry. Under the new scheme, subsidized fertilizer prices for farmers remain protected through the Highest Retail Price (HET) policy, while producers are encouraged to improve long-term industrial efficiency.

Previously, in December 2025, the Supreme Audit Agency (BPK) released the Summary of Semester Audit Results (IHPS) I 2025, which highlighted efficiency challenges in the production process of subsidized fertilizers during the audit period from 2022 to the first semester of 2024. These findings became part of a comprehensive evaluation of the subsidy fertilizer policy and governance framework in effect during that period.

In addition to policy changes, Yehezkiel stated that Pupuk Indonesia will continue to undertake various internal improvement measures, including operating plants at optimal modes, reconfiguring production processes, securing long-term raw material supply contracts, and implementing revamping programs for aging plants.

Yehezkiel added that Perpres 113/2025 also provides balanced flexibility in terms of the company’s financing capacity. Under the new scheme, subsidy payments for raw material procurement are made prior to procurement realization and are first reviewed by authorized institutions, thereby reducing interest burdens on working capital financing.

“With the combination of new policies and internal improvement initiatives, the governance of subsidized fertilizers is now entering a far more efficient and sustainable phase. Our focus is to ensure fertilizers are available on time, in the right quantities, and at affordable prices for farmers, while also maintaining state financial accountability,” he concluded.