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The world’s biggest palm oil producer currently has a mandatory 30% blend of palm oil-based fuel in its biodiesel and the government has been looking at raising it to 35% or 40% to support the price of local palm oil fruits.

JAKARTA: Indonesia aims to implement a 35% palm oil mix in biodiesel, known as B35, by the end of the month to help absorb excess palm oil supply, says senior energy ministry official Dadan Kusdiana.

The world’s biggest palm oil producer currently has a mandatory 30% blend of palm oil-based fuel in its biodiesel and the government has been looking at raising it to 35% or 40% to support the price of local palm oil fruits.

The country is struggling to cut palm oil inventories after a three-week export ban ending in May aimed at controlling domestic cooking oil prices had boosted stocks and weighed on palm fruit prices amid the peak harvest season.

CNBC Indonesia cited Dadan as saying yesterday that B35 should be brought in by the end of the month.

“That is the plan,” Dadan said in a message to Reuters, without elaborating.

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Dadan also told CNBC Indonesia that the ministry had run laboratory testing for biodiesel containing up to 40% of palm oil fuel in biodiesel (B40).

“We will run a road test for B40. For now, B35 would be implemented,” Dadan was quoted as saying.

Senior cabinet minister Luhut Pandjaitan on Thursday said authorities needed to make extra efforts to cut inventories and that an additional 2.5 million tonnes of palm oil could be absorbed if Indonesia implemented B40.

Indonesia’s palm oil stocks had climbed to 6.2 million tonnes following the ban, the chairman of industry group Indonesia Palm Oil Board Sahat Sinaga said. — Reuters

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