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Indonesia set to phase out cheap, dirty low-quality fuel

Indonesia will finally move away from cheap and dirty fuel to higher-grade variants as the government is gearing up to adopt a higher standard on emission levels from motor vehicles

Hans Nicholas Jong (The Jakarta Post)
Jakarta
Sat, September 24, 2016

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Indonesia set to phase out cheap, dirty low-quality fuel

I

ndonesia will finally move away from cheap and dirty fuel to higher-grade variants as the government is gearing up to adopt a higher standard on emission levels from motor vehicles.

As of now, Indonesia is the only country in the world to still use gasoline with the registered octane number (RON) 88 specification, which is of low quality and high in sulfur, in part because its refineries are not capable of producing high-quality gasoline with low sulfur content.

Sulfur is a natural component in crude oil that is present in gasoline and diesel unless removed. Sulfur in gasoline impairs the effectiveness of emission control systems and contributes to air pollution. The high sulfur content of fuel could lead to an increase in the number of people suffering from air pollution-related diseases.

Therefore, the government is planning to speed up the phasing out of RON 88 gasoline, which constitutes 87 percent of fuel consumption in the country.

Phasing out cheap and dirty fuel is in line with the government’s plan to adopt EURO IV, an international standard on emission levels from motor vehicles that requires automobiles to use fuel with a sulfur content no higher than 50 parts per million (ppm).

Meanwhile, Indonesian diesel, one of the most-widely used fuel sources in the country, contains sulfur content between 2,000 to 3,000 ppm. By comparison, the sulfur levels in fuel sold in Japan, Singapore and South Korea stands at 10 ppm, while fuels in China and Thailand have sulfur levels of 50 ppm.

The Environment and Forestry Ministry is slated to issue a ministerial decree forcing the industry to adopt the higher standard on emission levels, following Vice President Jusuf Kalla’s call to do so.

“If the Vice President has instructed that, it’s clear. The decision will be made by the minister later. We have prepared the ministerial decree,” the ministry’s environmental pollution and damage control director general, MR Karliansyah, told The Jakarta Post recently.

The ministerial decree was ready to be signed as the last stumbling block to phase out cheap and dirty fuel had been overcome as state-owned oil and gas firm Pertamina had finally agreed to move to higher RON fuel and adopt EURO IV standards, he said.

Pertamina had been reluctant to import cleaner gasoline, arguing that the move would create extra burden on the country’s already sluggish economy.

The company was reluctant despite many recommendations to the company to stop importing low-quality fuel since it was hard to find in the market and was no longer used by other countries, which increased Pertamina’s procurement and blending costs.

However, Pertamina had stated its readiness to import higher-octane fuel to meet the EURO IV standard, but the company’s current refineries were yet capable, Karliansyah said. “They have agreed. Now they’re looking for the right location to build an oil depot. That’s why it was agreed in our last meeting that Pertamina and Gaikindo [the Association of Indonesian Automotive Manufacturers] discuss together the right location,” he said. The oil depot will in future store the imported higher-octane fuel.

Pertamina Corporate Communication vice president Wianda Pusponegoro said the company could start producing EURO IV-standard fuel in 2021, when its Tuban refinery in East Java would be fully operational.

“After that, other refineries will also produce products with the same EURO IV certification. We are targeting all of those refineries to finish by 2023,” she told the Post.

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