USLI SARSI : B30 CAN BALANCE CPO PRICE
27 March 2023
According to Usli, who is also the President Director of PT Mahkota Group Tbk, the increase in B30 to B35 is a form of government commitment in the use of new renewable energy, in order to achieve Indonesia's independence in the energy sector. “This of course we must support together until finally it becomes B100,” said Usli.
It is explained that biodiesel is a mixture of palm oil-based biofuel with diesel fuel. Therefore, the percentage of biofuel blending into diesel fuel from 30% (B30) to 35% (B35). The implementation of B35 by the government as of February 1, 2023 is very good to maintain balancing or adjusting from the demand side.
“As long as palm oil products in the form of Crude Palm Oil (CPO) are mostly for export needs. This becomes very vulnerable to being played by outside countries. But with the increase in the need for palm oil products in the country, one of which is the application of B30 to B35, it can maintain price balance. Countries importing palm oil products will not easily play with the price of Indonesian palm oil.” said Wakit, Chairman of the North Sumatra Indonesian Entrepreneurs Association (APINDOSU) in charge of agriculture and plantations. Usli Sarsi told the analysis by telephone, Saturday (3/25).
According to Usli, who is also the President Director of PT Mahkota Group Tbk, the increase in B30 to B35 is a form of government commitment in the use of new renewable energy, in order to achieve Indonesia's independence in the energy sector. “This of course we must support together until finally it becomes B100,” said Usli.
He explained that biodiesel is a mixture of palm oil-based biofuel with diesel fuel. Therefore, the percentage of biofuel blending into diesel fuel from 30% (B30) to 35% (B35) means that the use of fuel can be reduced and replaced with biofuel.
He gave an example of the implementation of B30 in 2022 and more than 11.5 million kiloliters (KL) of palm oil-based biofuel was distributed for biodiesel. Reducing the use of diesel fuel that must be imported can save foreign exchange of around US$ 8.34 billion or the equivalent of more than IDR 122 trillion.
Not only that, the implementation of B30 has absorbed more than 1.3 million workers and reduced greenhouse gas (GHG) emissions by around 27.8 million tons of CO2e. By increasing the use of biofuel for biodiesel from B30 to B35, the demand for palm oil for biodiesel will automatically increase from 11.5 million KL to around 13.5 million KL. Not only that, the implementation of B30 has absorbed the workforce of more than 1.3 million people and reduced Greenhouse Gas (GHG) emissions by around 27.8 million tons of CO2e. By increasing the use of biofuel for biodiesel from B30 to B35, the demand for palm oil for biodiesel will automatically increase from 11.5 million KL to around 13.5 million KL.
Likewise, employment and GHG emission reduction also increased. If there is now a decline in CPO prices and exports, it does not mean that the implementation of B35 by the government is unable to increase CPO prices.
“The world price of CPO is strongly influenced by the supply of other vegetable oils,” Usli said. European countries are very protective of sunflower, soybean and other vegetable farmers. European countries are well aware that sunflower, soybean and other vegetable oils are not able to compete with palm oil.
In terms of production costs palm oil is much cheaper, as well as the production yield is much more. The price of sunflower and soybean oil cannot keep up with palm oil.
When in European countries the availability of vegetable oil in the form of sunflower and soybean increases, the demand for palm oil decreases. Conversely, if the supply of vegetable oil in the form of sunflower and soybean oil decreases, the demand for palm oil increases.
“As the demand for palm oil continues to increase domestically, it will pose a threat to palm oil importing countries. They can no longer play with palm oil prices because we have balanced the demand for palm oil,” said Usli.