House Asks for More Biodiesel Quota

The high demand for biodiesel has caused line ups of vehicles in a number of regions. Distribution of biodiesel must be ensured to be on target.

KOMPAS/YOLA SASTRA

Trucks queue when biodiesel stocks are empty at the Pisang gas station, Pauh District, Padang City, West Sumatra, Monday (28/3/2022). The scarcity of subsidized diesel makes drivers have to queue for hours to all day to get fuel. The flow of goods delivery also stalled..

JAKARTA, KOMPAS – House of Representatives (DPR) Commission VII, which oversees energy and natural mineral resources, has urged the government to increase the biodiesel quota by 2 million kiloliters this year so that the total allocation increases from 15.1 million kiloliters to 17.1 million kiloliters. The government is also asked to ensure the distribution of biodiesel is on target in all regions.

The demand of House Commission VII was one of the conclusions of the hearing with the directorate general of Oil and Gas at the Energy and Mineral Resources Ministry, PT Pertamina (Persero) and the Downstream Oil and Gas Regulatory Agency (BPH Migas), on Tuesday (29/3/2022) in Jakarta. One of the meeting agenda was to discuss the biodiesel supply crisis that has occurred in a number of regions.

In addition to increasing the biodiesel quota, deputy chairman of House Commission VII Eddy Soeparno said the government must also ensure that the distribution of biodiesel was on target. The Energy and Mineral Resources Ministry and BPH Migas should coordinate with law enforcement officials to improve distribution supervision and take firm action against all types of misuse of subsidized fuel oil, including biodiesel.

Regarding the biodiesel quota, Pertamina's president director Nicke Widyawati said this year's quota was lower than last year’s. Referring to BPH Migas data, the 2021 biodiesel quota was 15.8 million kiloliters, while for 2022 the quota is 15.1 million kiloliters. The demand for biodiesel has increased due to the economic recovery. In a number of provinces there had been an increase in demand up to 75 percent. Pertamina noted that there had been an excess of biodiesel consumption by 10 percent over the last three months.

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"If the demand trend continues, there is a possibility that biodiesel demand will increase to 16 million kiloliters by the end of 2022," said Nicke.

Previously, in a meeting with House Commission VII on Monday (28/3), Nicke said biodiesel had recently been used by large-scale industries, such as the palm oil and mining industries. The two industrial sectors were not included in the list of users who are entitled to consume biodiesel.

Regarding prices, according to Nicke, there was a price difference of Rp 7,800 (54 US cents) per liter for subsidized diesel and non-subsidized diesel. 93 percent of diesel sales were subsidized fuel, while non-subsidized diesel made up only 7 percent of the total volume of diesel fuel sold in Indonesia.

"We suspect that this [price] disparity has pushed consumption shifts [from non-subsidized diesel to subsidized diesel] so that the biodiesel subsidized by the government is not on target," she said.

KOMPAS/KRISTIAN OKA PRASETYADI

Truk-truk mengantre di jalan Sam Ratulangi untuk menuju SPBU Winangun, Manado, Sulawesi Utara, pada Kamis (24/3/2022) siang demi membeli solar bersubsidi. Solar bersubsidi sedang langka karena setiap SPBU hanya mendapatkan kuota penyaluran sebesar 8.000 liter.

Supervision

House Commission VII member from the Prosperous Justice Party (PKS), Abdul Kadir Karding, said BPH Migas should quickly follow up on the news of biodiesel shortages that had been widely reported in the mass media. At this time, what the community needs most is a quick solution to overcome the scarcity at some public gas station points.

Meanwhile, member of House Commission VII from the National Mandate Party (PAN), Nasril Bahar is of the opinion that it is important to have the real data on biodiesel consumption for the last three months. The certainty of this data would help control prices.

"Therefore, we ask for data on who the users are, whether they are plantations, mining or the marine sector, such as fishermen," he said.

In addition to tightening supervision, requests for additional biodiesel quotas must also be taken into account by the government. According to the head of the Center of Food, Energy and Sustainable Development with the Institute for Development of Economics and Finance (Indef), Abra PG Talattov, the problem with queuing for biodiesel purchases in a number of areas was caused by leakage and misuse. Therefore, urgent action must be taken by the government to ensure that the distribution of biodiesel is right on target.

Also read:

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Abra added that in addition to tightened supervision, another solution was for the government to adjust the selling price of biodiesel. The price could be increased, but not drastically and kept below the economic price so that it did not burden the state budget. The government would still be able to keep inflation on target.

“Increasing the quota for biodiesel triggers the swelling of the state budget. In addition, people who are entitled to receive the biodiesel will not necessarily get it when the quota is increased. As a result, the biodiesel queues will be repeated again and again,” said Abra.

KOMPAS/VINA OKTAVIA

Buying and selling activities at Pasir Gintung Market, Bandar Lampung, Friday (25/3/2022). Prices of basic necessities rose because distribution was hampered due to the scarcity of biodiesel..

Affected farmers

The scarcity of biodiesel in Lampung has hampered the distribution of agricultural commodities. Chilies and vegetables that should have been sent after harvest were delayed so their selling prices fell.

Ikbal Sutanto (36), a chili farmer from Sekincau district, West Lampung regency, Lampung, said the shortage of diesel in West Lampung had prevented vegetable trucks from operating every day. Chilies, which are usually sent to Bandar Lampung after harvest, now have to stay in the warehouse for one to two days.

"Truck owners say that they have to line up for diesel all day so they can't operate every day," said Ikbal.

So far, Ikbal and a number of other farmers have rented a truck to send chilies and vegetables to the traditional market in Bandar Lampung. The cost of sending farmers' crops from West Lampung to Bandar Lampung is Rp 350 per kilogram.

Truck owners say that they have to line up for diesel all day so they can't operate every day.

Ikbal said that the scarcity of diesel did not increase logistical costs. However, the delay in delivery for several days made the selling price plummet.

"The price of chili can go down to Rp 3,000 if the delivery is late and the weight will also be reduced if something is rotten," he said.

Currently, the selling price of large red chilies at the farm level in West Lampung is around Rp 21,000-Rp. 23,000 per kilogram. However, if the delivery is two to three days late, the selling price of chili is only Rp 18,000-Rp. 20,000 per kg, depending on the level of freshness of the chili.

This article was translated by Kurniawan Siswo.