| JAKARTA, June 19
JAKARTA, June 19 Indonesia is set to miss its
ambitious targets on the use of biodiesel this year due to
logistical and infrastructure problems, government officials and
analysts said, potentially weighing on the price of palm oil.
Southeast Asia's biggest economy and the top producer of
tropical palm oil introduced a regulation last August boosting
the use of palm-based biodiesel, in a move to cut its oil import
Jakarta's energy ministry raised the minimum bio content in
diesel fuel used for transport to 10 percent, up from 3-10
percent previously. For the power industry, the minimum was
doubled to 20 percent.
The government has set a biodiesel consumption target in
2014 of 4 million kilolitres, of which 1.56 million kilolitres
is for subsidised diesel for vehicles, with the rest to used by
power plants and non-subsidised sectors such as mining and
But by end-May, only 447,000 kilolitres had been used in the
subsidised diesel sector, Dadan Kusdiana, director of renewable
energy and energy conservation at the mining ministry, told
Reuters by text. He was unable to give data for other sectors.
Kusdiana said the figure for subsidised diesel was forecast
to rise to 1.34 million kilolitres by the end of the year.
Analysts, however, have been sceptical the government could
meet its targets due to issues in making biodiesel available
throughout the island archipelago, particularly in more remote
eastern provinces, and providing adequate supervision to ensure
the new standards were being adopted.
CIMB Investment Bank expects total biodiesel consumption of
about 1.5 million kilolitres in 2014.
"You cannot force somebody to use something that is not
easily available in the market in far away places," CIMB analyst
Ivy Ng said.
Indonesia's state energy firm Pertamina said in
March it procured palm oil in two tenders to blend 2.381 million
kilolitres of biodiesel out of a planned total of 5.3 million
kilolitres for 2014 and 2015 combined.
A third tender to buy palm oil for blending into biodiesel
to feed demand in eastern Indonesian provinces was due to be
issued by April but has so far not been issued.
Analysts said the slower-than-predicted take up would be
negative for palm oil prices, but the market was currently
focusing on the prospect of drier weather from an expected El
Nino weather event and higher crude oil prices.
Rising crude oil prices helped the benchmark September palm
oil contract to a three week high at 2,477 ringgit
($770) in early Thursday trade.
"Although the biodiesel mandate has not taken off as fast as
expected, we remain optimistic on its prospects," CIMB's Ng said
in a note.
($1 = 3.2170 Malaysian Ringgits)
(Reporting by Michael Taylor and Wilda Asmarini; Writing by
Michael Taylor; Editing by Richard Pullin)