Indonesia considers increasing the palm oil export tax to support biodiesel mandate

Eniya?Listiani Dewi, an official in the energy ministry, told reporters on Thursday that Indonesia would likely increase its palm?oil export levy to help support biodiesel production. She cited tightening finances.

Indonesia, as the largest palm oil exporter, has introduced a 40% biodiesel blend that is mandatory. This blend is known as B40 and it's the highest blending ratio in the world. It aims to increase the blend by 50% later this year.

The biodiesel program in Indonesia is subsidized by the proceeds of palm oil export levies. These are set at 10% and range between 4.75% to 9.5%.

Eniya, a spokesperson for the Economic Affairs Ministry, told reporters that cash reserves held by the plantation fund of the country were shrinking.

She added that a meeting to discuss the increase in levy will be held next week.

Data from the energy ministry showed that Indonesia will consume 14.2 million kilolitres of palm-based biodiesel by 2025. This is a 7.6% rise compared to last year.

The energy minister announced that a?road test' for B50 has begun in December.

The Energy Ministry has allocated 15,65 million kilolitres (or biodiesel based on palm oil) for the blending mandate this year. Reporting by Bernadette Cristina Munthe and Fransiska Nanangoy, Editing by David Stanway

(source: Reuters)