What Are the Risks of B40 Postponement?

Summary

The government will not implement the 40-percent biodiesel mandatory program or B40 this year and continue the B30 Program, despite President Joko Widodo's order to start it in 2021, at least in July. The Energy and Mineral Resources (ESDM) Ministry’s director-general of New, Renewable Energy, and Energy Conservation, Dadan Kusdiana, revealed that the price gap between crude palm oil (CPO) as the main raw material for biodiesel and diesel was currently quite wide.

Besides, increasing levies for the B40 Program incentive is also impossible. Therefore, the current ones will never cover the increasingly wider price gap between the CPO and diesel. "The CPO price is around Rp 1,040-Rp 1,050 per kg while the oil is currently US$45 per barrel, meaning the difference is about Rp 5,000. Therefore, the amount of money collected by the Oil Palm Estate Fund Management Agency [BPDP] can only support the B30 program," Dadan explained.

Meanwhile, the ministry’s Research and Development Agency (Balitibang) has already finished reviewing the B40 Program. The study tested the raw material characteristic, storage stability, fuel filter, precipitation, and performance, including the viability of the B40 incentive. "Based on the Balitbang study, the B40 Program can be implemented [this year]," he said.

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