GAPKI: B50 Biodiesel Blend Implementation Will Affect CPO Exports
23/10/2024 (TEMPO.CO), Jakarta - Eddy Martono, chair of the Indonesian Palm Oil Producers Association (GAPKI), said the introduction of the B50 biodiesel blend will reduce the amount of crude palm oil (CPO) exported. This, he said, could lead to a decline in the country's foreign exchange earnings.
B50 is the term used to describe a fuel that consists of a blend of diesel and biofuel (BBN) of 50 percent each. According to GAPKI's calculations, if B50 is implemented - assuming there is no change in the current palm oil situation - there will be a decrease in the amount of exports by 6 million tons, which is three times the estimated decrease in exports if B40 is implemented.
"With B40, if it is implemented, our exports will drop by 2 million tons. If we are forced to use B50, our exports will drop by 6 million tons from an average of 30 million tons," he said in a press conference at the GAPKI office in Central Jakarta on Tuesday, October 22.
Eddy said that a lower supply of Indonesian palm oil to the world will lead to a spike in global vegetable oil prices, which will result in soaring prices of palm oil products that may spark inflation in Indonesia.
According to GAPKI records, CPO production in August 2024 stood at 3.98 million tons, up 10.2 percent from 3.61 million tons in July. Meanwhile, palm kernel oil or PKO production rose to 391,000 tons from 344,000 tons in July.
Despite his concerns, Eddy said he believed the government, led by President Prabowo Subianto, would not implement the program recklessly. "I strongly believe that the government will not be reckless in implementing B50. Not while production is still stagnant as it is now," he said.
In fact, Eddy said, he sees the plan to develop B35 and B40 blends as a positive thing. One of the reasons is that it can be an opportunity for the government to optimize the domestic People's Oil Palm Rejuvenation (PSR) program, which is currently lagging behind neighboring countries.
According to the latest GAPKI data, palm oil stocks at the end of August stood at 2.45 million tons, down from 2.51 million tons at the end of July. This was due to a 10.2 percent increase in production, a 1.47 percent increase in domestic consumption and a 6.35 percent increase in exports.