19/02/2023 (Jakarta Globe), Jakarta - The B35 policy -- which increases the palm-oil based biodiesel blend from 30 percent to 35 percent -- could increase domestic demand for palm oil by 2 million tons, an industry executive has said.

“Switching from B30 to B35 will potentially spur a 2 million ton increase in [domestic palm oil] demand,” Santosa, the chief executive officer at the palm oil giant Astra Agro Lestari said at a recent media brief in Salatiga.

According to Santosa, domestic palm oil demand will rise between 3 and 3.5 million tons every time the government increases the biodiesel blend by 10 percent.

“Indonesia is the world’s largest producer and consumer of palm oil, especially now with the B35 mandate,” Santosa said.

When asked by reporters if the biodiesel has an impact on Astra Agro’s profitability, Santosa replied: “We sell our palm oil at home, but also export them. It all comes down to which market gives the best price.”

This means that Astra Agro Lestari has the option to pick the market in which the company can make the most money.

Indonesia is implementing the biodiesel program in a bid to cut diesel fuel imports, among others. The Oil Palm Plantation Fund Management Agency (BPDPKS) collects palm oil export levies. As biodiesel costs more than diesel, the BPDPKS will chip in from the collected levies to cover the price gap. Santosa revealed Indonesia’s annual palm oil exports topped 30 million tons or about two-thirds of the country’s total production.

“It is best to stop at B40. Indonesia should allocate most of its palm oil for export because we need to provide subsidies [for biofuel]. There are times when palm oil and diesel prices differ. That would call for subsidies, but who will provide them if there are no exports and levies?” Santosa said.

https://jakartaglobe.id/business/b35-to-spur-2-millionton-increase-in-domestic-palm-oil-demand