Three state plantation firms – PT Perkebunan Nusantara (PTPN) III, IV and V — will begin the construction of three biodiesel plants in Dumai, Riau province, before the second half of the year starts.

The three plants are expected to absorb Rp 400 billion in total investment.

“The plants will be finished in the next 18 months. In 2012 the plants will start producing biodiesel,” PTPN IV president director Dahlan  Harahap said on the sidelines of the signing of an MoU between the three firms with state oil and gas producer PT Pertamina on Thursday.

Pertamina has agreed to purchase the biodiesel from the plants and to prepare a storage facility for the biodiesel at the port in Dumai.

Dahlan said each of the plants has a capacity to process 100,000 tons of oil palm fruit bunches (TBS) annually. The capacity is expected to be doubled by 2014.

“If the demand keeps increasing, the capacity may jump to 1 million tons of TBS every year,” he said.
Dahlan said about 30 percent of the investment needed to construct the plants would come from the companies’ internal cash flow and the rest from bank loans.

Biofuel is currently being sold to retail customers. In 2008, Pertamina had 279 petrol stations selling biofuel while PLN has also used biofuel to help power nine of its power stations. These nine stations have a total capacity of 96 megawatts (MW).

Currently Indonesia has produced two types of biofuel: bioethanol — made from cassava, sugarcane and sweet sorghum, and biodiesel — made from castor, crude palm oil and jatropha.

By 2015, Indonesia plans to have 10 million hectares of palm oil plantations, up from 7.9 million today.

According to studies by state plantation companies, there are 44 million hectares of land in the country ideal for palm oil plantation. Using conservative yield estimates, this area of oil palm plantation could produce 145 billion liters per year of biodiesel, or 10 percent of current fossil diesel demand.

Besides planning to produce biodiesel, the state plantation firms also plan to produce electricity from biomass-generated power plants and sell it to state electricity company PT PLN.

To produce electricity power in the CPO factories, one factory will require between Rp 30 billion and Rp 40 billion in investment.  Dahlan said PTPN IV currently operates 50 factories, with each one potentially able to generate 3 MW of power  from biomass, mostly from the Empty Fruit Bunches (EFB) and any other available biomass waste.

PLN will be obtaining electric power from CPO plantations from power generated from biomass (EFBs) while Pertamina will obtain biofuel processed from the CPO itself.

“At the present, only two factories are ready to produce 6 MW in total of electricity power,” he said.
CPO is playing an increasingly important role in Indonesia today  with the demand for the product increasing which not only for food consumption and other uses but also as an energy supply crop.

The Indonesian Palm Oil Producers Association (GAPKI), consists of about 370 CPO producer firms  making use of about 2.4 million hectares of oil palm plantations.  They, along with many smaller farmers, are aiming to produce at least 25 million tons of CPO this year, up by 25 percent from last year’s production target of 20 million tons.

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