Biodiesel blending hinders non-subsidised fuel sales

Proposals to boost the mandatory amount of palm oil in biodiesel is thought to be hampering the government's efforts to increase the consumption of non-subsidised fuel in Indonesia.

Recent figures presented by the Downstream Oil and Gas Regulatory Agency (BPH Migas) show that the consumption of non-subsidised fuel reached a total of 26 million kilolitres in 2013, below the 29 million kl recorded in 2012.

Hendry Ahmad, acting director for fuel at BPH Migas said that non-subsidised fuel consumption fell last year due to a sharp increase in fuel prices, forcing industrial users to switch to cheaper sources of energy such as coal and gas.

He said that in addition to high prices, reluctance on the part of industrial users could also hamper the government's efforts to increase the use of biodiesel. The government raised the mandatory amount of palm oil blended in biodiesel to 10% this year. This will be further raised to 20% in January 2016 and 25% by 2025.

The volume of biodiesel mixing in the first quarter of this year remains below the target, despite the implementation of the 10% mandatory blending, according to the renewable energy directorate general. During the first three months of 2014, only about 350,000 kl of biodiesel had been blended. The government expects to see up to 4 million kl in biodiesel fuel by the year's end.

BPH Migas' commissioner Ibrahim Hasyim said communication between government officials and industries on the use of biodiesel should be encouraged to avoid misunderstanding.