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Price ceiling sought to support biodiesel
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Workers load oil palm fresh fruit bunches into a truck. (kompas.com/Iwan Setiyawan)
T
he government has said it is still working to formulate new biodiesel price caps for companies distributing the product in an effort to extend the outreach of subsidies to those operating outside the public service obligation (PSO) program.
The government and industry players are currently discussing proposed price caps for biodiesel distributed under PSO and nonPSO programs, which are expected to stand at a maximum of Rp 4,000 (30 US cents) and Rp 2,000 per liter, respectively.
“We need to discuss the figures further because we must follow the rules. As we revise the presidential regulation [for the new formula], we’ll stay with the existing scheme until the new one is ready,” said Musdhalifah Machmud, deputy for food and agricultural coordination at the Office of the Coordinating Economic Minister, on Tuesday.
The government expects to impose a new formula for the socalled biodiesel index price, which is currently calculated based on the crude palm oil (CPO) base price with the additional conversion cost of $125 per ton.
The Energy and Mineral Resources Ministry’s new and renewable energy director general, Rida Mulyana, said recently that it would have to carry out a simulation for the new formula amid the process of revising a presidential regulation to impose the scheme.
Under the new formula, the government will reduce the cost of converting CPO into fatty acid methyl ester (FAME) — which is used to produce biodiesel — to $100 per ton from the current $125 per ton. With the proposed $25 cut, it is estimated that the government will save $38.25 million.
The government expects the new formula to boost its subsidy funds, which will help biodiesel distributors to continue purchasing FAME from various producers and support the government’s mandatory biodiesel blending policy. “The [special] team for the tariff will analyze the overall [calculations],” Musdhalifah said.
