Indonesian palm oil state company will develop biodiesel in Papua by 2028

Agrinas Palma Nusantara, Indonesia's palm oil state company, plans to build a biofuel complex in Papua, aiming to make biodiesel exclusively from palm oil. A company director revealed this in an interview on Thursday with CNBC Indonesia.

Agrinas, previously a state-owned construction consultant, became the largest palm oil company in the world by area this year, after receiving 1.5 million hectares of land from the government.

The authorities seized these plantations because the previous owners did not have proper permits or had legal issues.

The land and soil in Papua are fertile, so Agrinas will have a large energy reserve there. "The land size is ideal for biodiesel development from upstream to downstream," Mohammad Wais Fansuri said, Agrinas finance and risk management director.

The company has hundreds of thousands hectares in Papua (the easternmost region of Indonesia) and is currently conducting a feasibility for the project.

Fansuri stated that the company plans to begin development in 2028-2029.

Fansuri reported that President Prabowo Subito has assigned Agrinas to produce enough palm to meet the rising demand for mandatory Biodiesel Blending, and to increase the bio-content in order to achieve 100% palm oil based biodiesel.

Indonesia's current blend of 40% biodiesel, also known as B40 is the highest required mix globally.

Fansuri added that Agrinas was also given the task of boosting state-controlled cooking oil production. He said that Agrinas, along with another state-owned palm grower PalmCo, will produce enough cooking oils to cover 30% the domestic market in 2013.

Fansuri stated that the company is managing the plantations for the government, but the legal ownership of the land could be formalised in the near future through a decree from the president expected to come soon. He said Agrinas plans to manage 3 million hectares of plantations by 2029.

Fansuri added that the company expects to receive a capital infusion from its parent, Danantara Indonesia's sovereign wealth fund, for plantation revitalization and other investments. (Reporting and editing by Gayatri Sroyo, Bernadette Cristina; Jacqueline Wong).

(source: Reuters)