Indonesia to extend biodiesel subsidy to mining sector

JAKARTA (Reuters) — Indonesia’s government plans to expand biodiesel subsidies to cover consumption of palm oil-blended fuels by the mining sector this year as part of ambitious plans to develop the energy source, an energy ministry official said on Thursday.

The subsidy for a program known as B20—referring to a blended fuel with 20% biodiesel content—has previously only been available to the power sector and to fuels sold to the public by PT Pertamina and PT AKR Corporindo.

“By considering funds available...for the time being we will intensify the use of biodiesel in the mining industry,” said Rida Mulyana, director general of renewable energy at the Energy and Mineral Resources Ministry.

The government is targeting expanding use of palm-blended fuels from an estimated 2.53 MM kiloliters (kl) in 2017 to about 3.5 MMkl in 2018—an increase of 38%.

The subsidy to the mining sector may be capped at 4,000 rupiah ($0.2978) per liter, Mulyana said. Subsidies approved for the existing sectors are set periodically based on the price of crude palm oil and crude oil.

Details of the subsidy’s implementation are still being discussed, but it is expected to take effect this year, the ministry official said.

The government is required to revise a presidential regulation that governs how palm oil funds are managed in order to implement the change, domestic media reported.

Reporting by Wilda Asmarini; Writing by Fransiska Nangoy; Editing by Kenneth Maxwell

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