FIRMS BEING ENCOURAGED TO INVEST IN BIOFUEL PROJECTS

By Andi Abdussalam


        Jakarta, Feb 17 (ANTARA) - Facing the problem of depleting oil reserves and continuously increasing fuel oil consumption, Indonesia is trying to make use of its vast land territory by encouraging investors to invest in integrated biofuel projects to replace fossil fuels.

        Some domestic and foreign companies, particularly plantation firms, have begun to look at this business. "Indonesia, along with Brazil, has the potential to become a world biofuel producer," Siswono Yudohusodo, chairman of the Indonesian Farmers Association (HKTI) said.

        At least three state-owned plantation companies, or PTPNs, are now conducting a feasibility study on the production of biofuel with an investment of Rp587.5 billion.

        Besides domestic companies, at least five Chinese firms are also reportedly investing US$500 million in biofuel development in East Nusa Tenggara (NTT).

        According to State Enterprises (BUMN) Minister Sofyan Djalil, his office is now encouraging state-owned plantation firms to invest Rp587.5 billion in biofuel and bioethanol production.

        "Besides seeking profits, PTPNs are also expected to be free from dependence on crude palm oil (CPO) by investing in the biofuel and bioethanol sectors," Djalil said.

        The minister said that state plantation companies needed to invest in the biofuel and bioethanol sectors in an effort to diversify their products amid the increasing need for biofuel at home where state-owned electricity firm PLN was expected to use biofuel for about 5 to 10 percent of its power generators.

        State Enterprise Deputy Minister for agro-industry, plantation and printing, Agus Pakpahan, said PTPN III, PTPN IV and PTPN VII were carrying out a feasibility study on the development of biofuel and bioethanol from the oil palm raw materials.

        "Feasibility study is undergoing and it is expected to be completed in several months to come. If completed, we will start the construction," he said.

        The main projects of the three state plantation companies included the construction of a biodiesel factory with a capacity of 400,000 tons per annum. Its construction will cost Rp237.5 billion and US$17.5 million.

        Besides, the projects also included a bioethanol project worth Rp350 billion and a biodiesel factory with a capacity of60,000 - 100,000 metric tons per annum worth US$17.5 million. The length of period needed to construct the three projects was estimated at two years after the feasibility study was completed.

        In the meantime, Indonesian Ambassador to China Sudrajat said recently that at least five Chinese firms were now ready to develop a biofuel business in Indonesia with a combined investment of US$500 million.

        "The Chinese firms have begun developing jatropha curcas plantation to develop biofuel in NTT ," the ambassador said.

        The Chinese firms, which come from Shenzen Shangai provinces, are developing jatropha in East Nusa Tenggara in cooperation with domestic companies and will further expand their business to Indonesian eastern rations.

        Based on a research, alternative energy that could be produced from Jatropha curcas has quality equal to diesel oil. The research was done by the Bandung-based Institute of Technology (ITB) in cooperation with the Mitsubishi Research Institute.

        In 2006, a team has also conducted a test on the use of jatropha curcas oil as fuel for motor vehicles and it found that this alternative energy was able to support a trip of more than 3,000 km from Atambua in East Nusa Tenggara province to Jakarta.

        Jatropha curcas nuts had 30 to 35 percent oil content so that each three kgs of nuts are able to yield one liter of bio-diesel. From the economic aspect, the price of bio-diesel which is produced from jatropha curcas nuts was about Rp4,500 per liter, cheaper than the rice of diesel oil and premium gasoline.

        Basides jatropha curcas, the Chinese firms will also develop biofuel from oil palm. Therefore, they are also planning to develop palm oil plantations in Kalimantan with an investment of about US$50 to US$150 million dollars.

        "I forget the name of the locations in Kalimantan but they have the commitment to invest more capital in order to increase their biofuel production capacity in Indonesia," Ambassador Sudrajat said.

        In Sumatra, particularly in Bengkulu province, a Belgium non-governmental organization, SIPEF, is also planning to invest some US$1 million in the development of jatropha curcas and other plants to produce biofuel in Mukomuko district.

        Mukomuko district government has set aside 6,000 hectares for the development of the plantation. "SIPEF will invest US$1 million in this project and we hope it would help the regional government not only in preserving forest but also in giving benefit to the local people," Ichwan Yunus, Mukomuki district head said.

        Local people in rural areas are actually a potential asset for the development of plantations that could produce biofuel in Indonesia

        According to Siwono Yudhohusodo, Indonesia had a vast land territory, a great number of workers, a good domestic and international market that could support its efforts to develop ethanol production and jatropha curcas plantations.

        "What is needed is a government policy which would enable villagers in rural areas to produce alternative energy," he said.***2*** (T.A014/A/HAJM/14:15/A/O001) (T.A014/A/A014/A/O001) 17-02-2009 14:24:28