Jakarta, May 14 (Antara) - With Indonesia's fossil fuel resources shrinking, the government is developing biofuel as a new and renewable energy (EBT) alternative.
This is a form of energy that can be put to multiple uses, such as to fuel the power plants that produce electricity.
The Indonesian Young Entrepreneurs Association (Hipmi) has called upon the government to provide subsidy to those who support the production of biofuel, and thus facilitate the process in the downstream sector.
"The government needs to provide subsidy for small and medium scale businesses as well as tax incentives for commercial, transportation and industrial sectors," Gafur Masud, the deputy treasurer of Hipmi, urged in Jakarta on Thursday.
He stated that special incentives need to be given to biofuel producers as that will help bring down the export of biofuel raw materials in large volumes.
Gafur, who is also the chief executive officer of Petro Perkasa Indonesia, argued that the government also needs to provide incentives in other forms, such as making banking access easier for small and medium scale businesses so that they can access easy finance.
"No less important is the support that the government can extend by conducting research and development for the advancement of biofuel business," Gafur said.
He was of the view that the development of biofuel in Indonesia was still lagging.
State-owned electricity company PLN is developing electricity for consumers in rural areas or villages which will use biofuel for some of its power plants.
Palm Oil Plantation Fund Management Agency (BPDP) Director Bayu Krisnamurthi said PLN's need for biofuel will be supported by his agency, based on a presidential regulation.
"Regarding oil palm levy imposed by the BPDP, the president has issued Presidential Regulation No. 24/2016 which amends the previous Presidential Regulation No. 61/2015," Bayu Krisnamurthi said in Jakarta last month.
The presidential regulation governs the mechanism of biofuel allocation, points of delivery and the use of oil palm funds to support the development of biofuel, including the use of biofuel by the PLN.
The PLN's need for biofuel amounts to around 200 to 250 thousand kiloliters for six months. This will at least maintain the biofuel consumption level at home which is predicted to drop by about 10 percent.
According to Krisnamurthi, the biofuel subsidy could be provided for PLN through the purchase of energy by state-owned oil and gas company, Pertamina, which will resell it to PLN.
Pertamina will buy biofuel at a price equal to the price of diesel fuel and resell it to the PLN at the same price. "It would remain the same mechanism as was in the past. However, earlier, the Pertamina itself used to consume the biofuel that it purchased. This time, it has to resell it to the PLN," he said.
Actually, the scheme to provide a subsidy to PLN was recommended last year. The new presidential regulation only reaffirms the scheme, according to Krisnamurthi.
The PLN, since the past several years, has been using biofuel for reducing its dependence on fossil fuel. Among the steps it has taken is to seek biofuel supply from several producer companies.
After all, the use of biofuel such as biodiesel could save production cost. For instance, the use of 40 percent biodiesel could save 6 million barrel kiloliters of fossil fuel per annum.
The Energy and Mineral Resources Ministry (ESDM) stated earlier that the government will set up a special company that will deal with new and renewable energy (EBT). The company is expected to be the subsidiary of PLN.
"The government is still discussing it internally. Discussions revolved around company form, management mechanism and which company is to be assigned to manage it," Rida Mulyana, the director general of new and renewable energy of the ESDM, said.
The government, he said, is inclined to assign one of the PLN subsidiaries to deal with the EBT business instead of establishing a new firm.
Regarding raw material for the production of biofuel, Hipmi deputy treasurer Gafur Masud said large scale export of plam oil as raw material should be prevented.
Therefore, Indonesia has begun to cut exports of crude palm oil (CPO) on shrinking production and growing domestic requirement to feed the country's bio-diesel industry.
The weather phenomenon El Nino has resulted in a decline in the country's production of palm oil. The country's production of palm oil fell 6.4 percent to 2.31 million tons in March from 2.47 million tons in February.
The decline in production forced the government to give more attention to maintaining stability in domestic supply and stocks.
Executive Director of the Indonesian Association of Palm Oil Companies (GAPKI)Fadhil Hasan said the country's exports of palm oil fell 24 percent to 1.74 million tons in March from 2.29 million tons in February.
In March 2016, the country's production of palm oil based biodiesel reached 270,000 kiloliters with domestic consumption of 200,000 kiloliters. The domestic consumption of bio-diesel in March 2016 fell 32 percent from 294,000 kiloliters in the same period last year.
Based on data at GAPKI, biodiesel consumption in the country in the first quarter of 2016 totaled 732,000 kl.
"With the consistency recorded in the domestic consumption, GAPKI is optimistic consumption target of 3 million kl this year would be reached," Fadhil said.
The country's stock of palm oil, bio-diesel and oleo-chemicals totaled 3.02 million tons in March down 12 percent from 3.44 million tons in the previous month.
Year-on-year, exports of palm oil rose to 6.14 million tons in the first quarter of this year from 5.6 million tons in the same period last year.
In March 2016, exports were cut to all countries of destination excepting to India and Middle East countries.
Exports to the United States plunged 84 percent from 74,680 tons to 12,240 tons, partly on large stock of soybean in that country.
Exports in March fell by 53 percent to African countries, by 46 percent to Bangladesh, by 31 percent to Pakistan, by 30 percent to China and by 13 percent to the European Union.
The decline in imports by those countries followed an increase in the price of that commodity and economic slump such as in Pakistan and Bangladesh.***3***
(a014/INE/B003)
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(T.A014/A/BESSR/Bustanuddin) 14-05-2016 21:54: |
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