JAKARTA – The rising trend of oil prices at the global market has sounded alarm for Indonesia, which relies on the import of the fossil fuel as the country has to fulfill 60 percent of its steadily-growing domestic need of the fossil fuel through imports. Recently, the oil price had reached US$90 per barrel, which was the highest since November 2022.
The Oil Palm Plantation Fund Management Board (BPDPKS) President Director Eddy Abdurrachman said that by considering such oil market condition, then the government’s policy to implement the mandatory program of palm-based biofuel is the correct one in reducing Indonesia’s reliance on the highly pollutive fossil fuel and cutting the carbon emissions as it is green energy. “The mandatory biofuel program is also very important as it has bolstered our palm oil industry by stabilizing the palm oil price,” he said.
According to Eddy, before the implementation of the biofuel mandatory program, Indonesian palm oil is very reliant on the export markets. As a result, palm oil prices are highly determined by foreign markets. “That’s why the government has launched the mandatory biodiesel program, although it needs quite a big amount of fund as reflected by the disbursement of fund managed by BPDPKS. The fund is derived from palm oil levies collected by BPDPKS,” he said during a public discussion on palm oil advocation in Jakarta recently.
“Currently, most of the BPDPKS’ fund is used to finance the development of biodiesel from palm oil. Why? Because the biodiesel program is very important for the sustainability of palm oil industry in Indonesia,” said Eddy.
The economic coordinating ministry’s Acting Deputy in charge of state-owned companies (BUMN), research and innovation coordination, Elen Setiadi said that the government’s biodiesel mandatory program has been continually upgraded during the last seven years from B15, a mixture of 15% palm oil and 85% diesel fuel in 2015, to B20 in 2016, B30 in 2020 and to B35 since February 2023.
Elen Setiadi said that until 30 June 2023, the realized distribution of biodiesel 35% (B35) reached 5.44 million kiloliters or 41.86% of the target set at 12.99 million kiloliters in 2023. The potential of foreign exchange saving from the biodiesel program is estimated at US$3.59 billion or around Rp55.23 trillion.
“The implementation of B35 program has also absorbed a total of 1,653,974 workers and cut greenhouse gas (GHG) emission at 34.9 million tons of CO2e,” said Elen Setiadi.
BPDPKS reported that since 2015 until May 2023 it had managed to collect palm oil levies at a total of Rp186.6 trillion, which have been used to finance a number programs to support the development of palm oil industry, including the payment of spread between the price of palm oil and diesel fuel.
The volume of the mandatory biodiesel has been also increasing. For 2023 it is projected to reach around 12.9 million metric tons, as compared to around 9.0 million metric tons in 2022. “The production volume and price of biodiesel has been rising every year. The biodiesel price is relatively higher than the price of diesel fuel. As a result, the biodiesel program needs bigger fund. But it is in line with the prevailing regulations, which is to cover the spread between the biodiesel price and diesel fuel price,” said Eddy.
Daymas Arangga, Executive Director of Energy Watch, said that Indonesia needs to reduce its reliance on the imports of fossil fuels. “At the same time, the program will support the mandatory biodiesel program and other green energy programs. The green energy programs are potential to reduce Indonesia’s reliance on the imports in the long run,” he said in a written statement recently. (*)
Source: sawitkita.id
