Biodiesel Program will cut Fuel Import by 6.9 Million Kiloliters

KATADATA - The plunge in the global oil prices to US$ 30 per barrel has affected commodity prices, including crude palm oil (CPO) price. The slump in CPO price has created a deep concern regarding the government’s biodiesel program called B20 mandatory policy. Regarding this matter, the government stated its commitment to continue implementing the B20 policy.

The Coordinating Economic Affairs Minister, Darmin Nasution, said with the implementation of B20, fuel import could be cut by 6.9 million kiloliters this year. This means the government can save US$ 2 billion of forex reserve in a year.

The funding for this program will be taken from the CPO Fund. In Darmin’s opinion, CPO Fund will be more than enough to support B20 policy, since the government has targeted to gather IDR 10 trillion of CPO Fund for this year. 

Meanwhile, the Finance Minister, Bambang Brodjonegoro, said this biodiesel program must continue to be implemented in order to add values to the lives of palm farmers. With the decline of palm export, the derived products must be boosted and exported to large-populated countries like China. China will be the perfect choice for this plan, since the industries in this great Asian country have just stopped using coals in order to stop air pollution from spreading even more. “They are suitable to use renewable energy,” Bambang added.

However, the government still discusses this plan with palm oil producers. If this plan works out and the export has started, palm oil price can be lifted and it will contribute even more to the state’s income. 

The Director General for New Renewable and Conservation Energy of the Energy and Mineral Resources Ministry, Rida Mulyana, confirmed about the pricing concern amongst the people. But, Rida assures that the B20 program will still be implemented through consolidation and coordination within the government. 

For additional information, every US$ 1 per barrel drop in the oil prices will require IDR 350 billion from the CPO Fund. And since the start of the year till now, oil prices have declined by US$ 10 per barrel. It means, CPO Fund must be able to support IDR 3.5 trillion. And for this year, to be able to realize the B20 program, the government will need to take IDR 9.5 trillion from CPO Fund. The calculation for this number is based on the assumption of oil prices to be at US$ 40 per barrel and the CPO prices to be at US$ 500 per ton. But, if the oil prices assumption is at US$ 20 per barrel, then the government will need IR 16.5 trillion from CPO Fund.