Indonesia signals start of bioethanol program in 2018

The Indonesian government announced that it plans to start its bioethanol blending program in East Java in 2018.

Chemical distributor PT AKR and state-owned oil and gas company PT Pertamina have been assigned to deliver the fuel, which will be distributed under a public service obligation (PSO) program, similar to the current biodiesel blending scheme.

The program has been delayed several times. Initial plans were to implement the E2 bioethanol program in the transportation sector in 2016, alongside an E5 program for the industrial, commercial and non-PSO transportation sectors. Currently, no fuel-grade ethanol has been produced in Indonesia since 2010, due to weak demand and price volatility.

Despite the government’s announcement, Pertamina spokesperson Adiatma Sardjito says the company would have to undertake a feasibility study first before implementing the bioethanol blending program. Pricing remains a key consideration in the success of the bioethanol scheme.

“We should manage the pricing policy carefully, because if the price of the blended fuel is far above that of regular fuels, customers will not be attracted, and this program will be useless,” says National Energy Board (DEN) Member Syamsir Abduh.

Energy and Mineral Resources Minister Ignasius Jonan said he plans to mandate the installation of at least one bioethanol pump in every service station in the country. This follows a similar move last year, when the ministry issued Decree No. 25/2017 requiring at least one compressed natural gas (CNG) dispenser in every service station, to encourage the use of CNG-fuelled vehicles.

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