Jurnal Sosial Humaniora (JSH) 2020, Volume 13, Ed.2 ISSN Online: 2443-3527 ISSN Print: 1979-5521 190 - JSH Gas Price Policy Analysis for Fertilizer Industries in Indonesia Based on Netback from Final Product Erwan Hermawan 1 , Widodo Wahyu Purwanto 2 1,2 Department of Chemical Engineering, Faculty of Engineering, Universitas Indonesia, Depok 16424, Indonesia. 1 erwan.hermawan@ui.ac.id 2 widodo@che.ui.ac.id Received: 03/09/2020. Reviewed: 18/11/2020. Published: 31/12/2020. Copyright ©2020 by the author (et al) and Jurnal Sosial Humaniora (JSH) *This work is licensed under the Creative Commons Attribution International License (CC BY 4.0). http://creativecommons.org/licenses/by/4.0/ Subject Area: Economic Abstract The industrial sector has an important role in the Indonesian economy. The problem facing the fertilizer industry is the price of gas as a raw material that tends to be expensive for the lower prices of crude oil since 2016. To overcome this problem the government issued Presidential Regulation No. 40/2016 on setting gas prices for the fertilizer industry but this regulation only sets floor gas prices at USD 6/MMBTU to secure revenues of gas producers. Meanwhile, the current sale gas contract for fertilizer applies an escalation. The objectives of this study are to evaluate the netback value of each fertilizer plant and assess the current gas price policy. The netback value is calculated based on the long-run marginal cost of urea production. The result shows that PKT 04 and PKT 05, Pusri 1B, 2B, 3, and 4, PKC 1A and 1B, and PKG have lower netback value than gas price contract, except for PKT plant based on average has the highest netback value, because they use pricing mechanism that linked to oil and product price. From this calculation the current gas price policy needs to be adjusted to keep the fertilizer industry profitably.. Keywords: Gas price policy; netback value; fertilizer Introduction The industrial sector has an important role for the Indonesian economy. In 2017 Indonesian GDP for the manufacturing and non-processing industries contributed around 38.2% from Indonesia's total GDP around Rp. 995 trillion. The fertilizer, petrochemical, and oleo chemical industries contributed around Rp. 248 trillion (Airlangga, 2016). The problem facing the industry today is that domestic gas prices tend to be expensive. The impact of this situation is high cost of production especially the industry using natural gas as feedstock. Share of feedstock for fertilizer and petrochemical production costs is around 70%. The high gas price is because the gas gas price contract uses is a fixed price mechanism with escalation, so gas prices tend to increase even though oil prices are down. To overcome natural gas prices problem, the government issued Presidential Regulation No. 40/2016 concerning gas pricing. In this regulation gas prices are regulated for seven main industries, including fertilizer industry. The derivative regulation is Minister of Energy and Mineral Resources Regulation No. 16/2016 concerning gas pricing for certain industries, which is the floor price for gas contract at USD