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Govt to monitor biodiesel expansion
The government and stakeholders have vowed to ensure a smooth implementation of an extended 20 percent blended biodiesel (B20) policy in the public and private services sector, which started on Saturday, in a move to save billions of rupiah in oil and gas imports annually
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he government and stakeholders have vowed to ensure a smooth implementation of an extended 20 percent blended biodiesel (B20) policy in the public and private services sector, which started on Saturday, in a move to save billions of rupiah in oil and gas imports annually.
Coordinating Economic Minister Darmin Nasution said the Energy and Mineral Resources Ministry and Finance Ministry’s Indonesian Palm Oil Estate Fund (BPDP-KS) had been assigned to supervise technicalities in the distribution of B20.
Darmin said B20 would replace regular Solar diesel fuel, a product of state energy giant Pertamina, but it would be sold at the exact same price of Rp 5,150 (34 US cents) per liter.
The figure is significantly lower than the assigned price of Rp 7,294 per liter set by the Energy and Mineral Resources Ministry as of August.
“We have talked about this with all parties, so it is safe to say that we are ready to move forward with B20,” Darmin said during the launch in Jakarta over the weekend.
A recently issued Presidential Regulation (Perpres) No. 66/2018 serves as a legal basis to expand the use of B20 to the non-public service obligation (PSO) sector, which includes heavy machinery used by firms in the private sector and various forms of transportation, such as trains and ships.
It was followed by Ministerial Regulation No. 41/2018 on the provision and utilization of the biodiesel category of biofuel, signed by Energy and Mineral Resources Minister Ignasius Jonan on Aug. 24.
Jonan has assigned Pertamina and petroleum and chemicals company AKR Corporindo to distribute 1.95 million kiloliters of mandatory B20 fuel and 940,470 kl of non-mandatory B20 fuel from September to December, in addition to appointing 19 domestic palm oil producers to provide the supply.
Pertamina’s newly inaugurated president director, Nicke Widyawati, said 52 out of 112 fuel terminals Pertamina operated had yet to receive B20 to sell on the first day of the policy. However, she ensured that they would receive stocks as soon as possible.
As a form of legal enforcement, the ministerial regulation stipulates that distributors who do not use B20 or fail to distribute the fuel under the government’s deadline will be charged with fines of Rp 6,000 per liter.
Rida Mulyana, the Energy and Mineral Resources’ director general for new and renewable energy, said that all existing fuel importers and distributors would have to provide evidence that their products were classified as B20 diesel fuel in order to operate in the country.
“If they do not have proof of B20 [in their products], we will not issue them a permit,” Rida said, adding that the ministry’s independent surveyors would audit the operators to ensure compliance.
With the B20 expansion, Darmin said Indonesia could save $2 billion to $2.3 billion in fuel imports until the end of this year.
By reducing fuel imports and replacing its supply with biodiesel, the government aims to narrow the current account deficit, which had widened to $8 billion in the second quarter from $5.7 billion in the first quarter.
A deficit in the current account means the country is spending beyond its means, adding to currency vulnerabilities as it needs foreign capital to fulfill demand in the domestic foreign exchange market.
Separately, Indonesian Biofuel Producers Association (Aprobi) chairman Paulus Tjakrawan said the government had helped B20 producers meet with institutions related to the distribution of the fuel nationwide, such as the Customs and Excise Directorate General, and state-owned port operator Pelindo.
Paulus said there were currently 22 biodiesel manufacturers in Indonesia with more than 11.8 million kl installed production capacity per year ready to support the new policy.
“There were a few differences of opinion from stakeholders who will be this policy’s end users. But thankfully, the association and the government have been able to straighten things out,” Paulus said in a press conference.
He added that the B20 expansion policy would help ensure a stable output among producers and allow them to enjoy possible stability in sales and crude palm oil (CPO) prices in the future.
