Biodiesel on high demand as Indonesia turns to cleaner fuel

Biodiesel on high demand as Indonesia turns to cleaner fuel

Local palm oil producers predict the domestic use of biodiesel will increase
by 30 percent to 40 percent in 2017 following the government's decision to
impose the 20 percent biodiesel blending ( B20 ) policy to non-subsidized
diesel fuel starting late last year.

"Domestic consumption for biodiesel will increase considering the wider
implementation of the B20 policy," said Indonesian Palm Oil Association
(Gapki) official Muryanto Amin recently.

Indonesia started implementing the B20 policy in early 2016 for the
transportation and industry sectors, while power plant sectors were obliged
to blend 30 percent of biodiesel ( B30 ) at the same time.

In November, the government began stipulating the implementation of the
program to all gas stations in the country, including state-owned and
private stations. Otherwise, each station would be charged Rp 6,000 (45 US
cents) for each liter of non-blended diesel fuel sold.

As a result, Indonesia was able to consume 2.7 million kiloliters of
biodiesel domestically throughout the year, 91 percent of which was blended
with subsidized diesel fuel and the rest blended with non-subsidized fuel.
The figure fell slightly from the original target of 2.9 million kiloliters.

This year, the government aims to increase the biodiesel consumption target
to 4.6 million kiloliters with 2.5 million kiloliters of which are expected
to be blended to make subsidized diesel fuel and 2.1 million kiloliters for
the non-subsidized fuel.

Biofuel Producers Association (Aprobi) has even predicted that the domestic
use of biodiesel could reach a maximum of 6 million kiloliters this year,
about a fifth of total anticipated diesel fuel consumption.

Meanwhile, the Indonesian Oil Palm Estate Fund (BPDP-KS) has allocated Rp
9.6 trillion to further support the implementation of the B20 policy. The
figure could fall slightly from last year's allocation of Rp 10.6 trillion
as the average crude oil and crude palm oil (CPO) prices are expected to
stand at around $50 to $60 dollar per barrel and $650 to $750 per ton,
respectively, this year.

"To meet the target, the government needs to boost the country's downstream
sector for palm oil, particularly by encouraging state firms to develop
their own processing plants to produce soaps or cosmetics, for instances,"
Muryanto said.

"At the moment, state firms have yet to process such downstream products."

Last year, Indonesia saw a 22 percent annual increase in exports of
processed palm oil products, such as refined, bleached and deodorized (RBD)
palm olein and RBD palm stearin. At that time, downstream products accounted
for 75.6 percent of the country's total export volume for palm oil products.

According to the Industry Ministry, the palm oil industry contributes about
$20 billion annually to the country's foreign exchange reserves, while
non-tax revenue (PNBP) from the sector reaches Rp 12 trillion a year.

"In our mid-term plan, we want to prioritize efforts to boost investment in
the palm oil processing industry to anticipate the growing domestic
production that will need 40 million tons of CPO by 2020," Industry Minister
Airlangga Hartarto said on Thursday.

"In the upstream sector, we also expect to boost the replanting program to
increase productivity of all smallholders."

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Link to Original Article:
http://www.thejakartapost.com/news/2017/02/04/biodiesel-on-high-demand-as-in
donesia-turns-to-cleaner-fuel.html

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John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com