May 6, 2020 / 8:53 AM / 22 days ago

Indonesia to discuss how to continue biodiesel program amid falling fuel prices

JAKARTA, May 6 (Reuters) - Indonesia’s ministry of economic affairs is set to discuss how the country will continue its ambitious biodiesel programme, a ministry official told Reuters on Wednesday.

The economic affairs ministry will meeting on Wednesday to decide the government’s next moves to ensure the continuity of a mandate which requires biodiesel to have 30% bio-content (B30) made from palm.

“We want to discuss how to keep the continuation of B30 (programme),” Musdhalifah Machmud, Deputy Minister for Food and Agriculture told Reuters in a text message.

Indonesia started unrolling an ambitious biodiesel programme in late 2018, with the aim of soaking up excess supplies of palm oil and curb expensive fuel imports, which was a big contributor to the country’s persistent current account deficits.

However, a historic crude oil rout this year has made palm oil - of which Indonesia is the biggest producer - less attractive for biodiesel feedstock.

Malaysia, the world’s second biggest palm oil producer delayed a nationwide rollout of a B20 biodiesel mandate last month due to movement curbs imposed to contain the coronavirus outbreak.

State energy company PT Pertamina, which is developing refineries to process palm oil into fuel, asked parliament to cap prices for some crude palm oil (CPO) in February.

B30 is the highest palm-based bio-content in biofuels ever used. The government plans to launch the B40 programme between 2021 and 2022.

Indonesia is targeting biodiesel consumption of 14.2 million kilolitres (KL) in 2022, more than double the 6.26 million KL in 2019, but Maritime and Investment Affairs minister Luhut Pandjaitan admits going beyond B50 will be difficult without higher CPO production. (Reporting by Bernadette Christina Munthe and Fathin Ungku, editing by Louise Heavens)

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