Indonesia expects problems with biodiesel scheme

06 December 2006 10:13  [Source: ICIS news]

SINGAPORE (ICIS news)--The Indonesian government’s plans to become a producer of biodiesel using jatropha feedstock by the end of next year could expect teething difficulties from two areas it has identified, an official from the Ministry of Industry said on Wednesday.

 

Effendi Sirait, expert member of staff for biofuels from the ministry, told ICIS news that the two main problems it foresees are a possible slow initial uptake of the projects by the provincial governments and Indonesia’s limited technical capabilities in harnessing biodiesel from the plant jatropha curcas.

 

The Indonesian government recently announced its plans to find an alternative source of energy in jatropha oil in an attempt to tackle volatile crude oil prices.

 

It plans to set up 52 small-sized biodiesel units integrated with plantations across rural areas in the country, mainly concentrated in southern Java, but also in Sumatra, Kalimantan and other areas in eastern Indonesia, said Sirait.

 

These units would yield a total capacity of 15,000 tonnes/year. He added that the government has budgeted rupiah 67bn ($7.3m/€5.5m) for this initiative, which could create 6,000 jobs.

 

The selection of rural areas as centres of production was not only an attempt to boost the local economies. The introduction of jatropha biodiesel production in these areas is also targeted at alleviating the current problem of poor oil distribution to these regions, which have led to the people using wood as cooking fuel.

 

The government also intends to encourage the rural population to use the by-product after oil extraction as burning fuel for purposes like cooking. 

 

Sirait said that the central government would spearhead the initiative by providing working capital, building infrastructure and technical assistance.

 

The local governments would, on the other hand, be expected to contribute 300 hectares of plantation land and farmers for each unit set up.

 

He added that preparations are currently being made to draw up tenders, while the selection of bids put forth by provincial governments is expected to take place in February or March 2007.

 

However, given that the jatropha – an indigenous plant species of the Caribbean – is new to Indonesia, Sirait expressed scepticism that many will be interested in taking up the government’s offer to venture into this unchartered territory.       

 

He also cited the low productivity of 5 tonnes/year of jatropha per hectare of land as the main hurdle preventing newcomers to the area.

 

The second problem the government has anticipated is the current lack of technical capabilities in terms of pressing equipment, or expellers, needed to extract oil from the crop, Sirait said.

 

He said a number of local engineering, procurement and construction (EPC) firms having shown interest in the development and manufacture of expellers including Rekayasa Engineering, Pindad and Pura Barutama.   

 

When asked whether the Indonesian government intends to open its EPC contracts to foreign firms, he said: “There is no objection to it in principle, though local firms will be given priority.”

      

($1 = Rp9093)

By: Keith Tan Liming
+65 6780 4359

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