Friday, July 27, 2007

[PBN] Indonesia: Biofuel firms may be obliged to have own oil palm plantations


Jakarta (ANTARA News) - The government is considering requiring biofuel
industries to have their own oil palm plantations in order not to
disrupt crude palm oil (CPO) supplies to the food industry, a minister said.

"The development of downstream industry is inseparable from its upstream
industry, meaning that biofuel firms must have their own oil palm
plantations," Agriculture Minister Anton Apriyantono said in a national
seminar on CPO for food or energy here Tuesday.

He said the government was mulling the obligation for biofuel industries
to keep CPO supplies in check.

At least upstream palm oil industries would continue to grow in the
future to create more jobs, he said.

Asked about the low production of biofuel as an alternative energy
source in the country, he said it was caused by its higher prices, the
more so the government still subsidized fuel oil prices.

"The government is also formulating a policy to boost the usage of
biofuel now that under a presidential decree biofuel is expected to
contribute to 5 percent of the national energy needs by 2025," he said.

Under the government`s biofuel promotion plan, Indonesia will increase
the use of biofuel to 5.29 million kiloliters by 2010 and 9.84 million
kiloliters by 2015.

Evita H. Legowo, an assistant to energy and mineral resources minister,
said recently state oil and gas firm Pertamina -- the only biofuel
distributor in the country -- was finding it hard to raise biofuel sales
because of its higher prices.

The minister, quoting data from the Investment Coordinating Board
(BKPM), said many foreign biofuel firms had applied for permits to
operate in the country.

"We are also figuring out what kind of decision suitable to boost the
use of biofuel. Do we need to provide biofuel subsidy or do we need to
divert fuel oil subsidy to biofuel subsidy. To that end, we need inputs
from stakeholders," he said.

He said the country would need an estimated 12 million tons of CPO a
year to produce oil palm-based biofuel. (*)

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