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Policy changes are needed in Indonesia so the country can maintain subsidies for its biodiesel program, the agency said. Reuters the head of a government agency on December 2.
It is mandatory for diesel to be blended with biological content 30% (B30) in Indonesia. However, plans to increase this amount to 40% have been delayed due to funding issues, the company said. Reuters .
Estate Crop Fund Agency (BPDP) chief executive Eddy Abdurrachman made the comments at the Indonesia Palm Oil Conference on December 2.
“The price difference between crude palm oil and diesel increased in 2020, posing a challenge to the sustainability of the support program, especially the mandatory biodiesel program,” he said.
The BPDP is the agency in charge of collecting and administering palm oil export taxes.
It was projected that in 2021, a significant increase in funds would be needed, Abdurrachman said, estimating that Indonesia would consume 9.59 million kiloliters of biodiesel next year.
Indonesia's biofuels program aimed to maximize domestic use of palm oil and reduce oil imports. However, a drop in oil prices this year has made it less economical, the Reuters .
“Policy adjustments are needed,” Abdurrachman said.
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Paulus Tjakrawan of the Indonesian Biofuel Producers Association told the conference that the price difference between the bio component of biodiesel – fatty acid methyl esters (FAME) made from palm oil – and diesel had increased to about US$$. 400/ton in 2020 around US $ 100 last year.
Indonesia needed to raise taxes on palm oil, impose a tax on fuel consumption or have palm oil companies contribute subsidies to support the program, said Bustanul Ariffin, an economist at the Institute for Development Economics and Finance, in conference. The program could suffer a deficit of 12.2 trillion rupiah (US $ 865.25 million) next year, he said.
Since June this year, Indonesia has levied a maximum duty of US $ 55/t on palm oil exports, regardless of the price, said the Reuters .
In September, Indonesia's Chief Economy Minister Airlangga Hartarto told Reuters that there were plans to revise its palm oil export tax rules to allow for higher collection when prices rise, but no regulations have been issued to date.
Dadan Kusdiana, an energy ministry official, told the conference that Indonesia's biodiesel consumption in 2020 was equivalent to 165,250 barrels of oil/day and saved US $ 3.09 billion in foreign exchange and 25.6 million tons of carbon.
This text was automatically translated from English.
Source: OFI International
