Investor Presentaiton
REGULATION
Pres. Reg No. 66/2018: Subsidy for
non PSO to boost B20 program
Biodiesel blending program was introduced in 2015 through MEMR Reg No.
12, targeting 20% blending in 2016 for transportation and industrial use.
Through Presidential Regulation 61/2015, the price gap between diesel
fuel and biodiesel in PSO sector is subsidized by CPO export duty. Biodiesel
share jumped to 10.8% in 2016 from only 2.6% in 2015. However, the B20
mandate had only been implemented to the subsidized PSO sector, with
86% of biodiesel consumption was from this sector in 2016 (Dharmawan et
al. 2018).
In September 2018, the government expanded the subsidy scheme to Non
PSO through Presidential Regulation No.66/2018. The new scheme has
doubled the biodiesel consumption in Q4 of 2018. The government even
seeks to speed up the implementation of B30 policy in 2019, from the initial
plan in 2020.
Period
Ministerial Decree
3756 K/10/MEM/2017
1803 K/10/MEM/2018
1935 K/10/MEM/2018
1936 K/10/MEM/2018
2018 K/10/MEM/2018
Nov 2017-Apr 2018
Mei-Okt 2018
Mei-Des 2018
Sep-Des 2018
Jan-Des 2019
PSO (KL)
1,407,778
Non PSO (KL)
1,456,966
1,950,205
940,407
6,197,101
kilo liter
40
40
30
20
10
Biodiesel share in diesel
2%
3%
1%
5%
11%
9%
3%
2011
2012
2013
2014
2015
2016
2017
Biodiesel PSO Non PSO
Data Source: bphmigas.go.id, Handbook of Energy & Economic Statistics of Indonesia 2018
This move was partly induced by the drop in crude palm oil demand
from international buyers due to environmental and social issues,
particularly ban of Indonesian biodiesel by EU which caused CPO price
to plummet. The increase in global crude oil prices have also pushed the
government to replace imported diesel with biodiesel to reduce trade
deficit.
There is, however, a heated debate on the impact of biodiesel on
industrial and heavy duty vehicles. The subsidy scheme is also deemed
unsustainable, since the fund source will be rapidly depleted due to
increasing domestic use and decreasing CPO price.
IESR (Institute for Essential Services Reform) | www.iesr.or.id
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