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Mining companies to use biodiesel fuel in June
The government has moved ahead with its plan to expand the use of biodiesel in mining at the end of the first half of this year
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The government has moved ahead with its plan to expand the use of biodiesel in mining at the end of the first half of this year.
Energy and Mineral Resources Ministry director general for energy conservation and renewable energy Rida Mulyana said the sector would apply the biodiesel blending policy under the non-public service obligation (PSO) scheme.
“We have coordinated with miners to support the plan [to widen biodiesel use],” he said recently.
Rida, however, did not disclose which mining companies had agreed to absorb palm oil-based biofuel.
The ministry has allocated at least 400,000 kiloliters for the 15 percent biodiesel blending program (B15) for a six-month period. The fuel will be used in heavy equipment at mining sites.
The plan is one of the latest measures prepared by the government to reach the domestic biodiesel consumption target of 3.5 million KL throughout 2018, up 30.6 percent from last year. Of this year’s target, 1 million KL is estimated to be absorbed by non-PSO players.
Indonesia has implemented the B-15 blending program since 2016 and will hike blending to 30 percent by 2020, according to the ministry’s roadmap.
Indonesian Biofuel Producers Association (Aprobi) chairman MP Tumanggor said the local biodiesel industry was ready to supply the 3.5 million KL this year as set out by the government.
“Even if the government wants to raise the target to 7 million KL, we have sufficient capacity to fulfill that,” he said, adding that biodiesel producers grouped under Aprobi had the production capacity of 11 million KL
annually.
Rida of the Energy and Mineral Resources Ministry added that the government would provide a subsidy for mining companies that used biodiesel, so that they would only pay for the fuel at a price equal to diesel. The incentive would derive from the Indonesian Oil Palm Estate Fund (BPDP-KS).
“[The BPDP-KS] will cover the shortfall of around Rp 2,000 per liter,” he said, adding that the fund might cover around Rp 800 billion in subsidies based on the projected 400,000 KL allocation for the program.
The ministry’s expert staff for natural resource economy Dadan Kusdiana said his side would strictly monitor the subsidies given to the mining sector.
“The evaluation on the subsidies will be conducted every six months,” he said.
Besides mining, the ministry also expects to restart the use of biodiesel in train locomotives after July, when the test of 5 percent-blended biodiesel is completed.
“Hopefully, the result of the test is good and then we can raise the blend to 10 percent or more,” Rida said.
Previously, locomotives driven by 20 percent-blended biodiesel were found to suffer from engine failure, leading to suspicion of its incompatibility with the trains. Earlier this year, the ministry carried out another test using biodiesel with a lower content of fatty-acid methyl ester, a palm oil derivative.
Rida added that once the implementation of biodiesel in mining and transportation succeeded, the ministry would widen the scope of the program to manufacturing.
“We’ve talked to Industry Minister Airlangga Hartato and he agreed with the plan, as long as there are [price] incentives to keep [industry] competitive,” he said.
