20/7/06 (The Jakarta Post, Jakarta)  -  The government is preparing to build eight biodiesel factories in the country in a move to provide an alternative to expensive fossil-based fuels.

Industry Minister Fahmi Idris said Wednesday that each of the factories would be built with production capacity of 3,000 tons to 6,000 tons per year.

He added that his ministry had not decided on the locations of the factories.

"We are in the process of selecting the right locations for the eight factories. We have offered the plan to all local administrations in the country," he said at a seminar in Jakarta.

He added that determining factors in selecting the locations would be close proximity to oil palm plantations, or other commodities such as cassava and sugarcane that can be used for biodiesel production.

"The construction of the planned factories, which are estimated to cost about Rp 60 billion (US$649,000) to Rp 65 billion, will be financed from the 2006 national budget."

Part of the funds, Fahmi said, would be used for operating the factories, and they would be handed over to local administrations within a year.

"In operating the factories, the local administrations will be helped by their enterprises, local cooperatives or other business units."

He said that private companies would be invited to construct the factories.

Separately, State Minister for Research and Technology Kusmayanto Kadiman said that he had provided the results of his research on the right locations for factories to Fahmi.

"If a factory will be built in West Sumatra, for example, then palm oil can be used for biodiesel production," he said.

"The best locations for the factories are marginal areas so that their operations can help the areas to grow."

A concerted movement for the use of biodiesel has emerged in the wake of skyrocketing oil prices. Biofuel is renewable and based on such crops as castor-oil plants, oil palm, cassava and sugarcane, which can all be grown in the country.

Most importantly, biofuel production is highly labor intensive and the renewable fuel burns cleaner.

Energy and Mineral Resources Minister Purnomo Yusgiantoro announced earlier a crash program to build 11 biodiesel plants, with production targets of 187 million liters next year and 1.3 billion liters by 2010, or equivalent to 3 percent of the country's total fuel consumption of 41 million kiloliters in 2005.

Critics consider the targets to be overly ambitious because the United States, which began developing biofuel much earlier than Indonesia, produced only about 280 million liters of biodiesel blends last year.

American consumption of biofuel, including ethanol, accounts for a mere 3 percent of the country's total fuel demand.