Indonesia's top diesel buyer says biofuel rule unworkable

[yuiyoshida]

JAKARTA -- Indonesian state power firm PLN says it cannot comply with government rules that it use diesel fuel with a bio content of at least 30% because it would damage generators, potentially curbing demand for biofuel ingredient palm oil in the world's top producer of the commodity.

In 2015, Jakarta mandated that the power industry should from this year use B30 biodiesel, hoping to reduce its crude oil imports bill, cut greenhouse gas emissions and stoke local appetite for palm oil.

Less-than-expected growth in bio consumption by Indonesia's largest diesel buyer could weigh on palm prices as more supplies are diverted to the global market.

"It's risky if we use B30 (because) machinery can shut down," chairani Rachmatullah, head of PLN's fuel and gas procurement division, told Reuters in an interview late last month.

"Eventually the machinery gets clogged with residue, like slagging, causing blockages and then it breaks down," she said, adding that diesel with a bio content of 20% would be "safer".

The official in charge of government biofuel policy said the biodiesel rule should be no problem for PLN, and that his office would investigate the issue and could apply sanctions. He did not specify what measures the ministry could take.

http://www.bangkokpost.com/news/asean/1033245/indonesias-top-diesel-buyer-says-biofuel-rule-unworkable