Industries to be obliged to use biofuel

The government is formulating a regulation to require industries to use biofuel in production activities beginning September this year in a bid to reduce the country?s reliance on fossil-based fuel.

?The preparation for the mandatory use of biofuel has reached its final stage. We are still formulating the standards in determining the prices of the biofuel,? Alhilal Hamdi, the chairman of the national team for bio fuel development, said in Jakarta on Wednesday.

According to him, the government would likely use the price references set under the Mid Oil Platts of Singapore (MOPS) in determining biofuel prices. ?The price of biodiesel will, for example, be based on the diesel oil price reference set under MOPS, while the price of ethanol is based on MOPS?s Premium price reference,? he added.

Alhilal said the regulation -- a ministerial decree -- will be issued the Ministry of Industries.

The government is also considering making a law requiring other industrial consumers, including big companies such as electricity firm PT Perusahaan Listrik Negara (PLN) and energy firm PT Pertamina, both owned by the state, to use biofuel. The law will among others regulate a gradual increase in the use of biofuel by the companies.

"The law is needed because a ministerial decree is easy to change. What we are afraid of is that once we have a new minister, the ministerial decree. A law will give a legal certainty," Alhilal said.

Alhilal explained that the country now consumed 22 million kiloliters of oil diesel per year. The government hopes that biodiesel will account for 10 percent of the nation's diesel consumption or 2 million kl . Meanwhile, the country's biodiesel output is now "close to 2 million kl," Alhilal said. (Bernard)