Pertamina to shutter green fuel business

Pertamina Marketing and Trading Director Achmad Faisal said that the company has no choice but to get out of its money losing biofuels business. He said that so far, Pertamina has lost Rp16.9 billion (US$1.9 million) selling BioSolar and BioPremium. A rise in palm oil and ethanol prices in the global market has made biofuel more expensive than oil-based fuels, he said. In order to make the biofuel business economically feasible, Pertamina has urged the government to provide financial incentives, such as tax relief for the producers of ethanol and crude palm oil (CPO), the raw materials used to produce biofuels. The first secretary of the National Biofuel Development Committee, Evita H. Legowo, said the government is considering halving the tax on biofuel used by cars, trucks and motorbikes to 2.5% from the current 5%. The tax reduction proposal follows the Jakarta administration’s decision to impose a 2.5% levy on the sale of vehicles that use compressed natural gas (CNG). (May 12, 2007)