By Fitri Wulandari
JAKARTA (Reuters) - Biodiesel producers should diversify to survive record-high crude palm oil prices, the head of a state-owned engineering firm and biodiesel producer said on Tuesday.
Byproducts that fetch a higher price would help Indonesia's biodiesel producers reach a profitable return on investment despite costly feedstocks and low domestic prices, said Triharyo Soesilo, President Director of PT Rekayasa Industri.
"At the current price, it's not profitable to sell only biodiesel. We can also produce other products with good economic values," said Soesilo, speaking to the Reuters Global Agriculture and Biofuel Summit from Jakarta.
The cost of producing biodiesel in Indonesia has surged to 7,700 rupiah ($0.817) a liter in October 2007 from around 5,000 rupiah a year ago. But at pump stations, biodiesel was sold at the same price as subsidized diesel oil of 4,300 rupiah a liter.
PT Rekayasa Industri and PT Bakrie Sumatra Plantations UNSP.JK are building a biodiesel plant with a production capacity of 100,000 tonnes a year.
But the project has already been delayed to 2009 from an initial target in 2008 due to soaring costs of palm oil, and the two firms are in talks about modifying the plant to produce other byproducts.
"If we go ahead, it can produce products that are more expensive than biodiesel," he said, adding it may need additional funds of 20 percent from an initial investment of $25 million.
He said one of the byproducts would be refined glycerin, used in the pharmaceutical industry. Continued...
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