Govt gives incentives to boost biofuel

The Ministry of Energy and Mineral Resources has proposed that ethanol used to make fuel for transportation sector be exempted from excise tax, and the government to provide a subsidy for biofuel made of ethanol.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said the initiative was aimed at encouraging the production of biofuel in the country.

"Draft on the tax exemption on ethanol products has been submitted to the Finance Ministry," he was quoted by Bisnis Indonesia as saying.

Ethanol, which is made from cassava, sugar cane or corn, can be used as the main ingredient for the production of gasohol, a mix between gasoline and ethanol .

The government estimates that Indonesia would need at least 1.67 million kiloliters of ethanol for the production of gasohol in 2007.

Early this month, the ministry of finance raised excise tax for ethanol and alcohol to Rp 10,000 per liter from Rp 2500 per liter previously. (*)