BALI: Indonesia is keeping to its B20 biodiesel despite palm oil prices surpassing RM3,000 per tonne, this week.
The biodiesel B20 is a blend of 20 per cent palm methyl ester (PME) and 80 per cent regular diesel.
In an interview with Business Times today, Indonesian Estate Crop Fund chief executive officer Bayu Krisnamurthi said, “We understand and respect Malaysia’s decision to delay raising the biodiesel mandate to B10.
“For Indonesia, it is different. We have collected the funds from exporters of crude palm oil and refined palm oil.
“We are continuing with our policy for the benefit of the industry. We are keeping to B20,” he said when met on the sidelines of the Indonesian Palm Oil Conference (IPOC) 2016 here today.
Last week, Malaysia’s Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong delayed raising the current B7 biodiesel mandate to B10 as palm oil prices have risen considerably.
For the past month, palm oil has been averaging at a supportive level of RM2,900 per tonne at the Bursa Malaysia Derivatives Market.
When Indonesia mooted the biodiesel programme under the purview of the Estate Crop Fund, Bayu said the rationale was to help bring down the nation's palm oil stocks and support prices in the international market.
Indonesia, the world's top palm oil producer, began collecting a US$50 per tonne levy on crude palm oil exports in July 2015 to fund biodiesel subsidies.
“When you use the word ‘subsidy’, please be reminded that the money collected is from exporters… it does not come from oil palm planters. The money doesn't come from the government either,” he said.
The Indonesian Estate Crop Fund collected US$350 million from palm oil exporters in 2015. This year, it expects to collect a further US$700 million.
Having used some of the money in its collection, Bayu said the kitty stands at around US$850 million.
“This amount is adequate to fund the biodiesel mandate until the third quarter of 2017. I say this even in the worst case scenario of low petroleum diesel prices, rising palm oil prices and a strengthening US dollar,” Bayu said.