Trade and markets
 

Detail

Area
Indonesia
Commodity Group
Biofuels
Commodity
Biodiesel
Date
01/02/2015
Policy Category
Consumption and marketing
Policy Instrument
Renewable energy policy
Description
Revised the method used to set domestic retail prices for biodiesel (using crude palm oil prices as a reference rather than the price of conventional diesel).
Notes
The government decided to change the method for setting the domestic retail price for biodiesel: starting in March 2015, pump prices will be determined based on the prevailing price of crude palm oil (plus processing costs and a 3 percent margin) rather than on the Singapore-based price for conventional diesel. Furthermore, biodiesel producers have been granted an almost threefold increase in state production subsidies, which passed from the IDR 1 400 (USD 0.11) per litre of biodiesel produced, paid until the end of 2014, to IDR 4 000 (USD 0.30) per litre. The annual volume of subsidized biodiesel has been set at 1.5 million tonnes, with government outlays to be financed from funds previously used to subsidize mineral fuel sales. The new method to set biofuel retail prices and the increase in producer subsidies are both aimed at stimulating domestic biodiesel production and guaranteeing its profitability amid falling international crude oil prices. Reportedly, the slump in crude oil quotations recorded since June 2014 has compromised the economic viability of the domestic biodiesel sector.