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B40 Program Hoped To Lift Up FFB Price

Jakarta – The Indonesian Palm Oil Association (GAPKI) has predicted that palm oil supply for biodiesel production will increase as the government will upgrade its biodiesel program to the production of biodiesel 40 percent (B40). But the association also ensures that it will stay consistent in supplying crude palm oil (CPO) for the need of B30 at local market.

“Currently, GAPKI supplies around 9.3 million tons of CPO for the biodiesel program,” GAPKI Secretary General Eddy Martono said in a press statement issued in Jakarta on Wednesday, 31 August 2022.

The oil palm plantation fund management board (BPDPKS) reported that Indonesia is the first country in the world that has managed to mix renewable energy with diesel fuel up to 30 percent or B30. Other countries like Argentina, Brazil, and the USA only managed to produce B10, B12, and B20 respectively. Based on data from the renewable energy and energy conservation directorate general at the ministry of energy and mineral resources (MEMR), the realization of B30 distribution until 27 August 2022 reached 6.4 million kiloliters, or 63 percent from its allocation of 10.15 million kiloliters.

GAPKI pointed out that it is open for a thorough monitoring by all sides, especially on the increase of blending percentage of palm oil. It is because the program will affect other palm oil derivative products, mainly between the production and the local needs for food, non-foods, and energy.

“It’s aimed to avoid unnecessary competition between foods and non-foods and energy,” he said.

Eddy proposed that to sustain the supply in the future, all growers should implement replanting program in their respective oil palm plantations. “Previously, many smallholders planted fake seeds, resulting in low productivity. Besides, many of the oil palm plantations are already old and in need of replanting,” he said.

Meanwhile, the association of biodiesel producers (Aprobi) Executive Director  Paulus Tjakrawan said that along with the government policy the consumption of biodiesel has seen a positive trend during the last decade. The positive trend has also driven up the biodiesel production significantly during the last 16 years.

“Total installed capacity of biodiesel production reached 16.6 million kiloliters as of 2021,” said Paulus.

Based on Aprobi data, during the last two years the distribution of B30 has increased from 8.43 million kiloliters in 2020 to 8.44 million kiloliters in 2021.

Paulus projected that allocation of distribution of B30 in 2022 will reach 10.15 million kiloliters. The use of palm oil for biodiesel production is estimated at 15 percent of the total palm oil production which amounted to 48.09 million tons in 2021.

In 2022, the use of palm oil for biodiesel production will reach 17 percent of total production. Most of the local consumption of palm oil is aimed for the production of foods, mainly cooking oil.

“The biodiesel production has significantly contributed to the national efforts of accelerating the national energy transition program. The development of bio-energy from palm oil has resulted in various products of bio-energy that include biodiesel, bio-gasoline and bioavtur,” he said.

The biodiesel production has been also effective in increasing the domestic absorption of palm oil when the global market was seeing weakening demand.

Paulus said that the use of biodiesel had helped the smallholders in raising their welfare, after reaching a balance between the local consumption and exports.

The balance has created a stable price of palm fresh fruit bunches (FFB) from smallholders. Even during the period of 2021 to March 2022, the price of FFB from smallholders averaged at over Rp3,000 per kg.  “It’s not correct to say that biodiesel program only benefits companies. The program has also supported the price increase of FFB from smallholders,” he said. (*)

Source: viva.co.id | Featured image via inilah.com

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