The Indonesian Palm Oil Association estimates that the crude palm oil price will be in the range US$850 to $900 per metric ton of CPO in this year supported by a number of positive catalysts - Photo: Privacy

JAKARTA (TheInsiderStories) – Indonesian government lowered the benchmark price ofr biodiesel to Rp6,795 (US$0.48) from Rp6,977 in a previous month. Likewise, bio-ethanol price decreased by Rp55 from the previous rate Rp10,255 to Rp10,200 per liter, energy and mineral resources (EMR) ministry said on Saturday (08/03).

The ministry noted the amount of the price of biofuel is used in the context of implementing the 20 percent biodiesel (B20) mandatory and applies to the mixing of diesel oil both for certain types of fuel oil and general types of fuel oil. This decree will be effective as of August 1, 2019, in accordance with the Director-General number 2005/10/DJE/2019.

“The two commodities underwent changes due to fluctuations in the price of palm oil (CPO) and the movement of the rupiah exchange rate against the US dollar,” the ministry said in a written statement.

It said the average CPO price for the period of 15 June -14 July 2019 was Rp6,394 per kilogram (kg), or 2.7 percent lower than the average price of May 15 – June 14, 2019, amounting to Rp6,573 per kg. The price includes transportation costs following the minister’s decision number 91K/12/DJE/2019.

The ministry said the market price index of biodiesel in the first six months of 2019 continues to fluctuate. In January the price of biodiesel was recorded at Rp6,371 per liter, February Rp7,015 per liter, March Rp7,403 per liter, April Rp7,387, May Rp7,348 and June Rp6,977 per liter.

As for the price of bio ethanol in August 2019 of Rp10,200 per liter, down 0.5 percent or Rp.55 compared to the previous month which was Rp10,255 per liter. This is based on the average Sugar Cane Drop Price of August 15, 2018 – 14 July 2019 amounting to Rp1,614 per kg.

As for the calculation, the average sugar drop price for a three-month period multiplied by 1.125 kg per liter plus $0.25 per liter. The decline in the price of bio ethanol this month was more due to differences in the exchange rate of the rupiah against the US dollar, said the spokesman Agung Pribadi in Jakarta.

Previously, the government has said the use of B20 scheme has saved $2.5 billion in foreign exchange since implementing in 2015. The government also ensure the sustainability of the palm oil industry in Indonesia although today many challenges mainly from the external side.

The total value of palm oil products in 2018 amounted to $17.89 billion and contributed 3.5 percent to the Gross Domestic Product. The palm oil industry is able to absorb up to 4.2 million workers directly and 14.3 million of indirect labor, while oil palm plantations managed by independent smallholders are able to absorb 4.6 million people.

The government has implemented an Indonesian Sustainable Palm Oil (ISPO) system since 2011. The ISPO is designed to ensure that oil palm Indonesia is managed by the Good Agricultural Practices in accordance with the principles of social, economic, and environmental sustainability.

Indonesia now faced the European Commission‘ regulation of derivatives (Delegated Act) Renewable Energy Directive II. This regulation classifies palm oil as a commodity biofuel are not sustainable and high-risk ILUC (Indirect Land Use Change). Another challenge is the imposition of anti-subsidy duties on palm oil-based biodiesel to Europe.


Written by Lexy Nantu, Email: