JAKARTA, March 12 Indonesia's Pertamina
plans to float a third tender to buy palm oil for
blending into biodiesel, an official of the state-owned oil firm
said, signalling a strong start to the nation's drive to step up
usage of the alternative fuel.
Southeast Asia's biggest economy and the top producer of
palm oil introduced a new regulation in August, aimed at burning
more palm-based biodiesel and cutting its oil import bill.
Although analysts were skeptical that it could be fully
implemented due to logistical hurdles in more remote eastern
provinces, even a partial success has the potential to lift palm
prices and narrow Indonesia's current account deficit.
Pertamina will issue tenders for a total 5.3 million
kilolitres of palm-based biodiesel for 2014 and 2015, said Ali
Mundakir, the company's vice president of corporate
communications, with 2.381 million kilolitres already procured.
"We have procured 2.381 million kilolitres through two
tenders or 45 percent of the target," Mundakir said. "To procure
the rest, we plan to hold a third tender in March or April."
The third tender would feed biodiesel demand in eastern
Indonesian provinces, said Mundakir, which may prove more
difficult logistically than the first two tenders.
To date, Singapore's Wilmar International and
unlisted Musim Mas are among the palm firms to win Pertamina's
tenders, said Mundakir, without mentioning specific volumes.
Jakarta's energy ministry raised the minimum bio content in
diesel to 10 percent, up from levels of 3-10 percent. For the
power industry, the minimum was doubled to 20 percent.
The Indonesian Palm Oil Association last week said
Indonesia's use of palm oil for blending into biodiesel is
likely to fall 41 percent short of its target due to a rally in
prices of the vegetable oil.
Malaysian palm oil futures surged to an 18-month
high of 2,916 ringgit per tonne this week, partly due to
expectations that dry weather in the Southeast Asian region may
dent palm oil production.
(Reporting by Yayat Supriatna; Writing by Michael Taylor;
Editing by Muralikumar Anantharaman)