Govt lets market determine biodiesel price ?

The government would not intervene to determine price for biodiesel, but, instead, allow the price to be determined through free market mechanism, a senior governmental official was quoted by Kontan daily as saying on Saturday.

?The price is a business-to-business affair,? Bambang PS Brojonegoro, acting Head of Fiscal Policy Body at the Ministry of Finance,, said.

He made the statement in response to calls by biodiesel producers for the government to set the price of biodiesel on the domestic market as a follow-up to its newly-introduced policy of raising the content of biodiesel in the petrodiesel sold on the domestic market.

Under the government policy announced late last month, the content of biodiesel in petrodiesel fuel is raised to 10 percent for the transportation sector and industries and 20 percent for power plants.

The policy is aimed to reduce the imports of petrodiesel and help recover the national CPO industry.

Bambang asked local biodiesel producers to directly negotiate with state owned oil and gas company PT Pertamina and state owned electricity company PT Perusahaan Listrik Negara (PLN) on the price of their products.

Bambang said the government lets the price to be determined by the market, it will not bar local biodiesel producers from exporting their products in case the price for the commodity is higher overseas.

Bambang noted however he is not worried that an increase in the price of biodiesel overseas will lead to the lack of biodiesel supplies on the local market.

?I don?t see the rise of CPI price will occur in the near future,? he said.

Biodesel in Indonesia consist of two main products, namely fatty acid methyl esters (FAME) which is made from palm oil; and ethanol made from cassava. (*)