Indonesia proposes subsidy of Rp2,500 a liter for biofuel

The Indonesian government has proposed to allocate a subsidy for the distribution of biofuel ranging between Rp2,000 and Rp2,500 (US$0.22 and US$0.28) per liter in the 2011 state budget. “The subsidy would only be given when the biofuel market price is higher than the market price for oil-based fuel,” Energy and Mineral Resources Minister Darwin Zahedy Saleh told legislators at a recent hearing. He said the subsidy was needed to ensure that a fall in prices would not cause financial losses to companies already involved in the production of biofuel in the country. This year, the subsidy allocated for biofuels was Rp 2,000 per liter, said Saleh. “We estimate the consumption of biofuel will reach 982,000 kiloliters in 2011,” Saleh said. This year, the consumption of biodiesel is estimated to reach 777,075 kiloliters. (June 14, 2010)