Indonesia Carries on with Biodiesel Program despite Limited Success
Although Indonesia's B15 biodiesel program, which refers to the government's program to blend 85 percent of diesel with a mandatory 15 percent of fatty acid methyl ester (derived from palm oil), is no success yet, the government is expected to introduce the B20 biodiesel program (raising the mandatory content of fatty methyl ester in biofuel to 20 percent) in early 2016. To support the B20 program, eleven companies are ready to supply biodiesel to state-owned energy company Pertamina and publicly-listed petroleum and basic chemicals distributor AKR Corporindo between November 2015 and April 2016.
The B15 program was implemented in April 2015 (as the follow up of the preceding B10 program). However, compliance has been low as producers had to wait for further specific regulations (related to the new palm oil export levies that are used to finance the biodiesel program), while Pertamina ran out of fatty acid methyl ester (FAME) reserves. Earlier this year, the government also set a new biofuel index price (HIP) in order to support local biodiesel producers. Previously, these producers were unwilling to supply biofuel as the steeply declining petroleum price made the biofuel business less profitable and attractive. Moreover, with the new HIP local producers do not have to compete with each other in terms of prices.
The eleven companies, which were appointed directly (without bidding process), will together supply a total of 1.87 million kiloliters of biodiesel to Pertamina and AKR Corporindo between November 2015 and April 2016. Nearly all (approx. 1.84 million kiloliters) will be supplied to Pertamina, the largest company in Indonesia in terms of profit and revenue. The three companies that will supply most of the biodiesel are Wilmar Nabati Indonesia, Wilmar Bioenergi Indonesia, and Musim Mas. After April 2016 the program will continue but the biodiesel suppliers have not been determined yet.
Eleven Biodiesel Suppliers in the Period Nov 2015 - April 2016:
| Company | Volume (kl) |
| Wilmar Nabati Indonesia | 547,407 |
| Wilmar Bioenergi Indonesia | 388,304 |
| Musim Mas | 338,982 |
| Cemerlang Energi Perkasa | 140,016 |
| Darmex Biofuels | 133,744 |
| Pelita Agung Agriindustri | 90,552 |
| Ciliandra Perkasa | 73,078 |
| Anugerahinti Gemanusa | 49,362 |
| Primanusa Palma Energi | 44,189 |
| Bioenergi Pratama Jaya | 33,375 |
| Energi Baharu Lestari | 20,078 |
Source: Kontan
In 2014, the Indonesian government implemented the B10 biodiesel program, forcing producers of subsidized diesel to blend their diesel with 10 percent of FAME. However, the program lacked success as the target (2.1 million kiloliters) was not achieved (with realization at 1.8 million kiloliters). This year, the B15 program was introduced with a production target of 4 million kiloliters. However, it remains unclear whether this target will be met, even though members of the Indonesian Biofuel Producers’ Association (Aprobi) now have a total installed biodiesel production capacity of nearly 7 million kiloliters per year.
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