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MOSCOW (MRC) -- Indonesia must
make policy changes to ensure it can keep subsidizing its ambitious biodiesel
program, the head of a government agency in charge of collecting and managing
palm oil export levies, reported Reuters
with reference to a virtual conference on Wednesday.
The world's
biggest producer of palm oil makes it mandatory for diesel to be blended with
30% bio content (B30), but plans to increase this to 40% have been delayed due
to funding issues.
"The price gap between crude palm oil and diesel
widened in 2020, posing a challenge to the sustainability of the support
program.. especially the mandatory biodiesel program," Eddy Abdurrachman,
president director of the Estate Crop Fund Agency (BPDP), told the Indonesian
Palm Oil Conference.
It was projected that in 2021 there would be a
significant increase in funds needed, Eddy said, estimating that Indonesia will
consume 9.59 million kilolitres of biodiesel next year.
Indonesia's
biofuel program aims to maximize domestic use of palm oil and cut imports of
oil, but a slump in crude prices this year has made it less
economical.
"Policy adjustments are required," Eddy said.
Paulus
Tjakrawan of the Indonesian Biofuel Producer Association told the conference
that the price gap between the bio component in biodiesel, fatty acid methyl
esters (FAME) made from palm oil, and diesel rose to around USD400 per tonne in
2020 from around USD100 last year.
Indonesia needed to either increase
palm levies, impose an excise tax on fuel or make palm companies contribute to
subsidies to sustain the program, Bustanul Ariffin, an economist at the
Institute for Development of Economics and Finance, told the conference, adding
the program may suffer a 12.2 trillion rupiah (USD865.25 million) deficit next
year.
Since June this year, Indonesia has collected a maximum USD55 levy
per tonne on palm oil exports, regardless of the price.
Indonesia's chief
economic minister, Airlangga Hartarto, told Reuters in September there were
plans to revise its palm oil export levy rules to allow higher collection when
prices increase, but no regulation has been issued yet.
Energy ministry
official Dadan Kusdiana told the conference Indonesia's 2020 biodiesel
consumption was equivalent to 165,250 barrels of oil per day and saved the
country USD3.09 bln in foreign exchange and 25.6 million tonnes of
carbon.
Although biodiesel promises lower emissions, land clearance to
grow palm oil has raised concern about deforestation.
As MRC wrote
before, Indonesia's largest petrochemical producer Chandra Asri and
Netherlands-based storage and terminal operator Vopak are planning to set up an
infrastructure joint venture in Indonesia. The two companies signed a
letter of intent on 5 October to set up the partnership, which aims to establish
a new jetty and tank farm business that will serve third-party customers and to
build secondary infrastructure at Chandra Asri's new petrochemical complex, the
Indonesian firm said.
Chandra Asri's second petrochemical complex will
include a 1.1mn t/yr naphtha-based cracker, 450,000 t/yr high-density
polyethylene (HDPE) unit, 300,000 t/yr low-density polyethylene unit (LDPE) and
a 450,000 t/yr polypropylene (PP) unit. The producer is aiming to commission the
complex in 2024, barring any delays because of the Covid-19
pandemic.
Ethylene and propylene are feedstocks for producing PE and
PP.
According to MRC's ScanPlast report,
Russia's estimated PE consumption totalled 1,760,950 tonnes in the first ten
months of 2020, up by 3% year on year. Only high density polyethylene (HDPE) and
linear low density polyethylene (LLDPE) shipments increased. At the same time,
PP shipments to the Russian market reached 978,870 tonnes in
January-October 2020 (calculated using the formula: production minus exports
plus imports minus producers' inventories as of 1 January, 2020). Supply of
exclusively of PP random copolymer increased. |
