INDONESIAN POLS STOP BIOFUEL MADNESS

House Rejects Demand to Raise Biofuel Subsidies
Reva Sasistiya, February 10, 2009 (Jakarta Globe)

"The House of Representatives… rejected a government proposal to raise subsidies for the development of biofuels from an initial plan of Rp 774.47 billion ($66.6 million) to Rp 831.42 billion, arguing that it was irrational.

"Evita Legowo, director general of oil and gas at the Ministry of Energy and Mineral Resources, proposed an additional Rp 56.95 billion to support biofuel development…Under a mandatory scheme that started in October, there must be at least 1 percent biofuel in the fossil-fuel blends that Pertamina sells at the pump, 2.5 percent in fuel for industrial use and 0.25 percent in fuel used by state-owned electricity utility PT Perusahaan Listrik Negara."

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"The government now subsidizes Pertamina’s sales of premium, diesel and kerosene fuel…But benchmark biofuel prices in Southeast Asia have risen an average of 10 percent per liter since November, making biofuel producers less inclined to supply Pertamina with the biofuel it needs to make the blends, unless the state firm is willing to pay more.

"In January, the government proposed increasing the biofuel subsidy by Rp 1,000, in line with a projected increase in biofuel consumption this year."

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"In the revised 2009 budget, the government projects premium gasoline consumption to reach 20.6 million kiloliters and diesel consumption to hit 12.5 million kiloliters…Bioethanol consumption, meanwhile, is expected to hit 206,389 kiloliters and biodiesel consumption is expected to rise to 625,038 kiloliters, bringing biofuel subsidies to Rp 831.4 billion…

"Without biofuel subsidies, the biofuel industry loses an average of Rp 610 a liter on it sales of biodiesel and bioethanol to Pertamina…Lawmakers objected to the proposal to subsidize biofuel production because they said it would distort the fuel subsidy budget…"