Marchio Irfan Gorbiano, Jakarta – President Joko "Jokowi" Widodo said he wanted to increase the portion of diesel blended with crude palm oil (CPO) from the current 20 percent (B20) to 30 percent (B30) starting January next year and to 50 percent (B50) by the end of 2020.
"I want it so that by January 2020, we have already moved to B30. And by the end of 2020, we will jump to B50," Jokowi said during a Cabinet meeting at the Presidential Office on Monday.
"We need to anticipate any pressure on CPO [by driving up] domestic demand and so that we can have a good bargaining position, whether with the European Union or other parties that try to weaken our position."
The leap is expected to bring down imports of oil, which drags down Indonesia's trade balance and by extension, its current account position, while also generating domestic demand for CPO amid external uncertainties affecting CPO prices, said Jokowi.
In a recent spat with EU over biodiesel, a CPO derivative product, the 28-member bloc accused the Indonesian government of subsidizing its biodiesel producers, such as from the Indonesian Oil Palm Estate Fund (BPDP-KS), as well as exporting financing from Indonesia Eximbank.
Speaking after the Cabinet meeting, Coordinating Economic Minister Darmin Nasution said the Energy and Mineral Resources Ministry was conducting tests over the usage of B30, which was expected to be finished by mid-September. He added that currently, no serious issues were found in the tests.
On average, the adoption of B20 – which was counted from the distribution of Fatty Acid Methyl Ester (FAME), a specific CPO derivative that is used in biodiesel blends – had reached 97.5 percent of its monthly target between January and July this year.
Cumulatively, the distributed FAME stood at 3.49 million kiloliters as of July this year, or 56 percent of 6.19 million kiloliters of FAME targeted to be used as a biodiesel blend this year, and saved up to US$1.7 billion in foreign exchange due to fewer oil imports, according to data from the Office of the Coordinating Economic Minister.