Indonesia plans to start its mandatory biofuel blending program in September with a 2.5% mix of either bioethanol or biodiesel, a senior industry executive said, Dow Jones reported. The blend will gradually be raised to 10% by 2010 in a bid to reduce reliance on fossil fuels, said Erwin Duma, biofuel business development manager of PT Molindo Raya Industrial.
Many ethanol plants are being built to meet the targeted production capacity of 4 million kiloliters of bioethanol by 2010. Indonesia currently produces around 160,000 kiloliters a year, while consumption of ethanol for industry and biofuel purposes is currently around 150,000 kiloliters.When biofuel blends reached 10%, Duma estimates that around 2 million kiloliters of bioethanol will be required every year.
PT Molindo is currently the sole supplier of bioethanol to state-owned oil and gas company PT Pertamina, which has been tasked by the government to sell biodiesel since 2006. "Most of the ethanol plants will use cassava as feedstock," said Duma. PT Molindo is in the midst of constructing two more ethanol plants in Sumatra and Java with a combined capacity of around 100,000 kiloliters a year that will use cassava to make bioethanol.
Duma expects the export price of bioethanol, currently at $550-$620 a metric ton, free-on-board, to rise 20%-30% in the second half of the year due to rising international prices of gasoline and feedstock such as molasses and cassava.