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Jakarta Post

Supply concerns hamper expansion of biodiesel use

  • Raras Cahyafitri

    The Jakarta Post

Jakarta   /   Fri, July 18, 2014   /  10:18 am

State-owned electricity company PT PLN said on Thursday that it had not received the biodiesel needed to fuel its power plants and meet the government'€™s mandatory policy of using cheaper renewable energy sources.

The PLN placed part of the blame on the state oil and gas company, PT Pertamina, for failing to provide supply.

The PLN head of oil and gas division, Suryadi Mardjoeki, said the company could only absorb 85,000 kiloliters (kl) during the January to June period, less than 12 percent of the PLN'€™s initial target of 800,000 kl this year.

Suryadi said the low-level of absorption was because the PLN had only received B10-variety biodiesel, and had yet to receive supplies of the B20 and B40 type that contained a fatty acid methyl ester (FAME) content of 20 percent..

'€œThe only way to meet the target is by requesting Pertamina to supply B20 and B40. Apart from that, we are also seeking supplies of PPO [pure palm oil] to be blended with our fuel,'€ Suryadi said.

The PLN, according to Suryadi, is planning to launch a second phase of tenders for the procurement of PPO, which will be mixed with diesel fuel to feed power plants.

The first phase, which was launched last June, was unsuccessful, as only two parties participated in the bidding, according to Suryadi.

The second phase of tenders will involve the procurement of 123,000 kl of PPO.

However, Suryadi said that the PPO procurement would not help PLN to meet its biodiesel blending target.

'€œMy optimistic figure is to absorb 250,000 kl,'€ Suryadi said.

Pertamina vice president of retail fuel marketing Muhammad Iskandar said that the PLN had yet to officially request the fuel-type and that several power plants could not actually be run with the type of biodiesel set by the PLN.

The mandatory biodiesel blending policy is part of the government'€™s attempt to reduce state expenditures on oil and diesel imports, which are bleeding the country'€™s current account.

The government began requiring diesel used for industry and transportation to contain 10 percent biofuel in September of last year. Prior to the move, the country had established a minimum of 7.5 percent.

For electricity, beginning this year, the mandatory blending percentage will be set at 20 percent. The Energy and Mineral Resources Ministry'€™s bioenergy director, Dadan Kusdiana, said as many as 999,000 kl of biodiesel had been blended into fuel by the end of the first second quarter.

The figure included blended biodiesel subsidized and non-subsidized fuel as well as electricity.

Absorption over the first half of the year was deemed inadequate, as the government had set a target of 3.96 million kl in biodiesel use by year'€™ end.

Dadan estimated that biodiesel blending may reach just 2 million kl by year'€™s end.

'€œThat'€™s the worst scenario. We will continue trying to boost it to 3 million kl,'€ Dadan said.

In anticipation of the low uptake, Dadan said the ministry was planning ways to boost PLN absorption capacity.

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