Freshly picked oil palm fruits from a plantation in Batang Toru subdistrict, South Tapanuli, North Sumatra. (JG Photo/Nur Yasmin)

Can We Ever Get 100 Percent Biodiesel?

BY :DIANA MARISKA

FEBRUARY 20, 2020

Bogor, West Java. Palm oil producers are saying for the government to reach its goal of developing B100, or 100-percent biodiesel fuel, it would need more than just boosting the production of palm oil.

Palm oil producer Astra Agro Lestari president director Santosa said in Bogor on Tuesday that biodiesel development is multifaceted and will require many other things to go right aside from adequate palm oil production. 

According to his estimation, palm oil production under normal circumstances will continue to grow at a rate of 3 million tons per year in the next few years.

"For the next seven to ten years, I estimated growth of 3 million tons annually," Santosa said.

He also gave estimations of the required production figures if Indonesia is to move forward with its biodiesel development.

Santosa said to move from B30 – biodiesel with a 30 percent mix of biofuel – to B40, Indonesia would need to increase its palm oil production by up until 3 million tons.

"So to get to [B]50, we will have to increase it at least by 6 million tons," Santosa said.

Santosa said he was optimistic that for the next few years, palm oil production in the country will be able to keep up with the government's biodiesel plan.

"If we're talking [production of palm oil], right now we're at 47 million tons. With good weather conditions, we can boost that by 15 million tons within five years. That's 62 million tons already," Santosa said.

However, Santosa said there are other factors to consider if the government's biodiesel program is to run according to plan.

"Whether or not we can even get to B50 will depend on global crude oil price, the price of palm oil and how much we can export," Santosa said.

Santosa said if there's a reduction in palm oil export, the Palm Oil Plantation Fund Management Agency (BPDPKS) will collect less money for the government. 

The BPDPKS has been collecting a $50 per ton export levy on crude palm oil and $30 per ton levy on crude palm oil derivative products since 2015.

The levies were imposed to encourage local producers to sell more of their products at home and to give incentives to local biodiesel producers.

"The way it's done now, Pertamina buys biofuel at the Mean of Platts Singapore (MOPS) price. If the actual price of palm oil in Dumai, after it's processed into fatty acid methyl esters (FAME), is higher than the MOPS, the difference will be subsidized by the BPDPKS," Santosa said.

"Last year, the government didn't have to subsidize anything because oil price was between $58-$60 per barrel and palm oil was only $500 [per metric ton]. But this year they will have to. If [palm oil price] reaches $800 [per metric ton], it would only be nine months before the BPDPKS collapses," Santosa said.

This means export is still needed since the government levies can be used to subsidize palm oil for national consumption.

In December, the Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan said that without a replanting program, the current palm oil supply would not be sufficient for the government to get to more than B50.

"It seems like we're going to stop at B50. Because we don't have enough supply [of palm oil]. We will start a replanting program next year [2020] to get 500,000 new oil palm shrubs. With new seeds, we can expect a yield of six to eight tons per hectare," Luhut said.

However, Luhut did not rule out the current scenario might change. 

"In the condition we're in right now, we will stop at B50. But let's see in a few years. We might be able to produce enough B100 for PLN [State Power Company]," Luhut said.

SHARE