Indonesia biodiesel firms await subsidy
Indonesia's palm-based biodiesel firms await a fair price formula and government subsidies to survive as they feel the squeeze of surging palm oil prices.
The fledgling industry is expected to play a key role in absorbing growing palm output in world's top producer, but as feedstock prices become more expensive than fossil oils, it is difficult for the industry to expand without government support.
The government had planned to subsidise biofuel for transportation and a price formula had been agreed by the industry but these have yet to take effect despite the implementation of a mandatory biofuel policy since January.
As a result, the industry has been reluctant to supply biodiesel because prices offered by PT Pertamina, which blends the product, are below commercial prices.
Biofuels firms have received purchase orders from Pertamina but they have been delaying deliveries, or just stopped supplying the state-run fuel distributor.
Indonesian palm-based biodiesel firms could process up to 2.5 million tonnes of palm oil a year, or about 14% of the country's palm output, if they run at full capacity. But they could lose about €0.142 per litre for selling their product to Pertamina on par to subsidised mineral-based diesel, which is now priced at €0.317 per litre.
The fledgling industry is expected to play a key role in absorbing growing palm output in world's top producer, but as feedstock prices become more expensive than fossil oils, it is difficult for the industry to expand without government support.
The government had planned to subsidise biofuel for transportation and a price formula had been agreed by the industry but these have yet to take effect despite the implementation of a mandatory biofuel policy since January.
As a result, the industry has been reluctant to supply biodiesel because prices offered by PT Pertamina, which blends the product, are below commercial prices.
Biofuels firms have received purchase orders from Pertamina but they have been delaying deliveries, or just stopped supplying the state-run fuel distributor.
Indonesian palm-based biodiesel firms could process up to 2.5 million tonnes of palm oil a year, or about 14% of the country's palm output, if they run at full capacity. But they could lose about €0.142 per litre for selling their product to Pertamina on par to subsidised mineral-based diesel, which is now priced at €0.317 per litre.
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