T

he amount of biodiesel blended into diesel fuel during the January-March period was nowhere near the quarterly target as poor infrastructure and a prolonged procurement tender had gotten in the way.

Only 350,000 kiloliters of biodiesel were blended into diesel fuel during that period '€” far below a quarter of the government'€™s full-year target of 4 million kl, Energy and Mineral Resources Ministry director for bioenergy Dadan Kusdiana said on Monday.

'€œThat number is equal to savings of US$237 million in foreign exchange reserves,'€ Dadan said.

The government began requiring diesel for industry and transportation to contain 10 percent biofuel in September last year as part of an attempt to reduce oil imports and ultimately reduce the gap in the country'€™s current account.

Last year, the mandatory biodiesel blending requirement helped lower diesel fuel imports by 1.05 million kl worth $831 million.

This year'€™s total will include the blending of 1.64 million kl of biodiesel into subsidized diesel fuel, 808,000 kl into diesel fuel for power generation and 1.57 million kl into diesel fuel for industrial use.

The total blending is expected to save up to $3.1 billion in the country'€™s foreign exchange reserves this year.

The ministry'€™s renewable energy director general Rida Mulyana attributed the low realization of biodiesel usage to delayed biodiesel procurement tenders by PT Pertamina and PT PLN as well as a lack of blending facilities particularly in the eastern part of Indonesia.

'€œTenders are targeted to be completed in May or June so that we can get back on track to achieve the target for the second half,'€ he said.

Rida admitted that the government would likely miss the target of blending 4 million kl of biodiesel this year, given no significant infrastructure and procurement progress taking place in the first six months.

Earlier this year, state-owned oil and gas giant Pertamina '€” the country'€™s main distributor of the petroleum product '€” said it had secured a supply of 2.4 million kl or only 45 percent of the fatty acid methyl ester (FAME) needed for the mandatory blending for this year and next year.

The figure was lower than the company'€™s need of 5.3 million kl of FAME for this year and next year after tenders to procure the item offered held last year.

Pricing scheme was one of the main issues that caused the state company to fail at procuring the product as targeted.

Biodiesel producers have been calling for the company to set pricing terms above the benchmark of fuel pricing, which is the Mean of Platts Singapore (MOPS), to make the procurement more attractive.

Pertamina is currently working on other tenders to look for 850,000 kl of FAME per year to be blended with diesel fuel to be distributed to Sumatra, Nusa Tenggara, Kalimantan, Sulawesi and Papua areas.

Apart from Pertamina, state-owned electricity firm PT PLN is also working on auctions for the procurement of 123,000 kl of processed palm oil (PPO) to feed its power plants to help reduce the company'€™s oil consumption.