Biofuel firms may be obliged to have own oil palm plantations

"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.

Source: ANTARA