JAKARTA’S BIODIESEL MANDATE TO BOOST PALM OIL PRICES?
Move expected to boost global prices from average RM2,200 per tonne
GLOBAL palm oil prices are set to rise from the average RM2,200 per tonne as Indonesia implements and enforces the B20 mandate throughout all sectors, says Musdhalifah Machmud, the Deputy Minister for Food and Agriculture at the Coordinating Ministry of Economic Affairs.
She said her government, while preparing to enforce B20 nationwide, was also embarking on trial runs of B30 with automotive manufacturers.
“If the results are favourable, Indonesia would like to raise the mandate further from B20 to B30 next year.”
Biodiesel usage in Indonesia is currently only mandatory for subsidised diesel users, of which other users cannot buy.
There are 19 biodiesel producers and 14 fuel retailers in Indonesia.
She said after September 1, Indonesian fuel stations would be prohibited from selling regular diesel fuel.
“If fuel companies are found selling unblended fuel without any palm oil content, they will be penalised,” she said after the opening of Council of Palm Oil Producing Countries’ (CPOPC) seminar on good agricultural practices, here, yesterday.
Indonesia is the world’s biggest palm oil producer and exports some 35 million tonnes per year, ahead of Malaysia with close to 20 million tonnes.
Collectively, Indonesia and Malaysia command more than 85 per cent of world’s palm oil supply. As Indonesia sets a mandate on palm oil usage and with Malaysia’s cooperation, it would have an impact on global pricing.
Last week, Indonesia President Joko Widodo, in a cabinet meeting, said he wanted an immediate implementation of Indonesia’s biodiesel expansion programme to help save billions of dollars in diesel imports.
B20 biodiesel is a blend of 20 per cent biodiesel and 80 per cent petroleum diesel.
Primary Industries Minister Teresa Kok, in her speech at the seminar, noted both Malaysia and Indonesia via CPOPC should continuously put right misinformation on palm oil industry, including allegations of high indirect land use change (ILUC) and greenhouse gases (GHG) emissions.
“We must respond effectively to these wrong allegations with the correct scientific facts and figures about the palm oil sector,” she said.
“The CPOPC has a bigger task at hand now as importing countries, such as the European Union, are wrongfully linking palm oil with high ILUC and GHG emissions.
“CPOPC needs to collate the facts and figures to show the truth.”
Kok’s speech was read by her deputy Shamsul Iskandar Akin.
Also present were Primary Industries Ministry secretary-general Datuk Zurinah Pawanteh, CPOPC executive director Mahendra Siregar and Belgian Ambassador to Malaysia Daniel Dargent.