While the government expanded the mandatory use of a 20 percent biodiesel blend ( B20 ) in September, it plans to further boost domestic biodiesel consumption to absorb more crude palm oil (CPO) amid fluctuation in the global market price of the commodity.
Apart from improving the distribution of the B20 blend across to the country, the government is also carrying out research to increase the portion of biodiesel in the fuels rom 20 percent to 30 percent ( B30 ) or even to 100 percent ( B100 ).
The Energy and Mineral Resources Ministry’s oil and gas director general, Djoko Siswanto, was quoted by kontan.co.id on Monday as saying that B100 fuel was being tested by the ministry.
State-owned oil and gas holding company Pertamina supply chain operations manager Gema Iriandus Pahalawan further explained that three more biodiesel refineries would be developed, likely in Plaju in South Sumatra, Dumai in Riau and Balikpapan in East Kalimantan, to produce more biodiesel.
Gema said the production of B30 biodiesel was expected to be implemented, while the government was still improving the B20 distribution, which had reached 97 percent in November and was planned to be completed in December.
However, he declined to comment further on the plan to construct the three refineries. “We are still in the process of calculating the budget. The plan may be realized in the next few years,” he added, as reported by kontan.co.id.
Meanwhile, Indonesian Biodiesel Producers Association (Aprobi) chairman Master Parulian Tumanggor said the government had managed to improve the purchase order mechanism and simplify the delivery process of the fuel.
Master said the biodiesel producers were ready to produce B30 blends and now were waiting for the government’s decision.
Meanwhile, NH Korindo Sekuritas analyst Joni Wintarja said the government needed to expand the use of biodiesel to lift the declining price of palm oil in the global market.
He said Indonesia accounted for 56 percent of worldwide production of the commodity and for 57 percent of CPO exports.
“The problem is that the CPO price has declined 20 percent from early 2017 to July 2018. The expanded domestic use of B20 will help increase the commodity’s global price,” said Joni.
The securities analyst stressed the need to expand the installed capacity for B20 production, which was only about 3.4 million kiloliters per year, while India, which was not a major palm oil producer, imported some 11 million tons of crude palm oil per year to produce biodiesel.