Main Risks related to the Fertilizer Business Sector

1. Main Risks related to the Fertilizer Business Sector

These are main risks that abide by the Pareto principle in influencing the Company’s success as well as the success of other companies in the fertilizer business sector, and in influencing the creation of added value for the Company’s shareholders.

Tentang Laporan Keberlanjutan

Business figure of PT Pupuk Indonesia (Persero)

Figur Usaha Pupuk Indonesia (Persero)

Memupuk Kemakmuran Negeri

About Sustainability Report

Fostering the Prosperity of the Country

Memupuk Tata Kelola Keberlanjutan

Cultivating Sustainable Governance

No. Risiko Perubahan

Mitigasi

Risk Tingkat Risiko

Mitigation

(TR) Awal dengan

Akhir 2016 Change in Risk Level (TR) in the Start and End of

1 Penurunan TR Awal = 20

a) Providing additional working capital Pendapatan

a) Penyediaan fasilitas

via addendum to the joint credit dan Laba

TR Akhir = 10

tambahan modal kerja melalui

facility; Konsolidasi

(Turun)

penandatangan adendum suplesi/

Start TR = 20

penambahan fasilitas pinjaman

Consolidated End TR = 10

b) Optimizing the usage of joint credit Revenue and

bersama;

facility among subsidiaries; Income

(Decrease)

b) Optimalisasi penggunaan fasilitas

pinjaman bersama bagi anak perusahaan;

c) Penyempurnaan POB Hedging di

c) Enhancing POB Hedging in PT

PT Pupuk Indonesia (Persero) dan

Pupuk Indonesia (Persero) and

subsidiaries. 2 Kuantum

anak perusahaan.

The Company: Penjualan

TR Awal = 20

Perseroan:

a) Coordinated with relevant parties Pupuk Subsidi

TR Akhir = 15

a)

Melakukan koordinasi dengan

to accelerate the issuance of Tidak Sesuai

(Turun)

pihak-pihak terkait untuk

Governor’s Regulations and Penugasan

Start TR = 20

mempercepat penerbitan Pergub

Regent’s Regulations on allocation Quantity

End TR = 15

dan Perbup tentang alokasi

of subsidized fertilizers; of Sales of

(Decrease)

pupuk subsidi;

b) Disseminated and supervised Subsidized

b)

Melaksanakan kegiatan sosialisasi

technological advancements and Fertilizer Not

& kawalan teknologi, dan kegiatan

GP3K movement; in Accordance

GP3K;

c) Evaluated distributors’ with the

c)

Melakukan evaluasi kinerja

performance. Obligation

distributor.

3 Harga Pasar TR Awal = 20

The Company: Lebih Rendah

Perseroan:

a) Sold products at the designated dari HPP untuk (Turun)

TR Akhir =6

a)

Menjual produk dijual sesuai

market prices; Pupuk Urea

harga pasar;

b) Converted the Urea commercial Non Subsidi

Start TR = 20

b)

Mengkonversi target produksi

production target into Ammonia; Market Price

End TR = 6

Urea Komersil menjadi Amoniak;

c) Decreased the production rate; Lower than

(Decrease)

c) Menurunkan Rate Produksi;

d) Continued production and stored HPP for Non-

d)

Tetap berproduksi dan

the Urea as inventory. Subsidized Urea

menyimpan Urea sebagai stock.

4 Jumlah TR Awal = 20

a) Updated the Key Operating Unscheduled

Perseroan:

Procedures (KEY) in every Shutdown

TR Akhir =20

a) Melakukan Update Key Operating

subsidiary; Pabrik Melebihi Start TR = 20

(Tetap)

Procedure (KEY) di setiap anak

b) Conducted Root Cause Analysis Anggaran

perusahaan;

for the causes of unscheduled Total

End TR = 20

b) Melakukan Root Cause Analysis

shutdowns; Unscheduled

(Unchanged)

penyebab unscheduled shutdown;

c) Conducted Preventive Shutdowns

c) Pelaksanaan Preventive

Maintenance. Exceeding Budget

Maintenance.

5 Konsumsi TR Awal = 20

The Company: Bahan Baku

Perseroan:

a) Standardized the Production Cost per ton Produk

TR Akhir =20

a) Melakukan standarisasi Harga

(HPP) and Losses for NPK raw Melebihi

(Tetap)

Pokok Produksi (HPP) dan Losses

materials; Anggaran

Start TR = 20

untuk bahan baku NPK;

b) Conducted On Desk Audit on Consumption

End TR = 20

b) Melaksanakan On Desk Audit Energi

Internal and External Energy Use. of Raw Materials per tons of Product Exceeding Budget

(Unchanged)

Internal dan Eksternal.

6 Ketidakpastian TR Awal = 20

The Company: Pasokan Gas

Perseroan:

a) Extended the gas contracts for Uncertainty in

TR Akhir =20

a) Melakukan perpanjangan kontrak

Kaltim-3 (2018), Kaltim-2 (2019), Gas Supply

(Tetap)

gas Kaltim-3 (2018), Kaltim-2

and Kaltim-1A (2020); Start

Start TR = 20

(2019), dan Kaltim-1A (2020);

End TR = 20

b) Coordinated with SKK Migas in (Unchanged)

b) Melakukan koordinasi dengan SKK

Migas terkait alokasi gas untuk

relation to the gas allocation for

Kujang 1C plant. 7 Gangguan

Pabrik Kujang 1C.

The Company: Peralatan

TR Awal = 12

Perseroan:

a) Adjusted the plant rate in line with Pabrik

TR Akhir =8

a) Melakukan pengaturan rate pabrik

the prevailing market situation; Disturbances

(Turun)

sesuai dengan situasi pasar;

b) Coordinated with the marketing in Plant

Start TR = 12

b) Melakukan koordinasi dengan

unit to synchronize production and Equipment

End TR = 8

pemasaran untuk sinkronisasi

(Decrease)

produksi dan penjualan;

sales;

menentukan program efisiensi. c) Conducted energy audit to determine efficiency programs to be pursued.

c) Melakukan audit energi untuk