Plantation firms to produce biodiesel for Pertamina

Nani Afrida , The Jakarta Post , Jakarta | Fri, 04/09/2010 10:53 AM |
Business

Three state plantation firms - PT Perkebunan Nusantara (PTPN) III, IV and V
- will begin the construction of three biodiesel plants in Dumai, Riau
province, before the second half of the year starts.
The three plants are expected to absorb Rp 400 billion in total investment.
"The plants will be finished in the next 18 months. In 2012 the plants will
start producing biodiesel," PTPN IV president director Dahlan Harahap said
on the sidelines of the signing of an MoU between the three firms with state
oil and gas producer PT Pertamina on Thursday.
Pertamina has agreed to purchase the biodiesel from the plants and to
prepare a storage facility for the biodiesel at the port in Dumai.
Dahlan said each of the plants has a capacity to process 100,000 tons of oil
palm fruit bunches (TBS) annually. The capacity is expected to be doubled by
2014.
"If the demand keeps increasing, the capacity may jump to 1 million tons of
TBS every year," he said.
Dahlan said about 30 percent of the investment needed to construct the
plants would come from the companies' internal cash flow and the rest from
bank loans.
Biofuel is currently being sold to retail customers. In 2008, Pertamina had
279 petrol stations selling biofuel while PLN has also used biofuel to help
power nine of its power stations. These nine stations have a total capacity
of 96 megawatts (MW).
Currently Indonesia has produced two types of biofuel: bioethanol - made
from cassava, sugarcane and sweet sorghum, and biodiesel - made from castor,
crude palm oil and jatropha.
By 2015, Indonesia plans to have 10 million hectares of palm oil
plantations, up from 7.9 million today.
According to studies by state plantation companies, there are 44 million
hectares of land in the country ideal for palm oil plantation. Using
conservative yield estimates, this area of oil palm plantation could produce
145 billion liters per year of biodiesel, or 10 percent of current fossil
diesel demand.
Besides planning to produce biodiesel, the state plantation firms also plan
to produce electricity from biomass-generated power plants and sell it to
state electricity company PT PLN.
To produce electricity power in the CPO factories, one factory will require
between Rp 30 billion and Rp 40 billion in investment. Dahlan said PTPN IV
currently operates 50 factories, with each one potentially able to generate
3 MW of power from biomass, mostly from the Empty Fruit Bunches (EFB) and
any other available biomass waste.
PLN will be obtaining electric power from CPO plantations from power
generated from biomass (EFBs) while Pertamina will obtain biofuel processed
from the CPO itself.
"At the present, only two factories are ready to produce 6 MW in total of
electricity power," he said.
CPO is playing an increasingly important role in Indonesia today with the
demand for the product increasing which not only for food consumption and
other uses but also as an energy supply crop.
The Indonesian Palm Oil Producers Association (GAPKI), consists of about 370
CPO producer firms making use of about 2.4 million hectares of oil palm
plantations. They, along with many smaller farmers, are aiming to produce
at least 25 million tons of CPO this year, up by 25 percent from last year's
production target of 20 million tons.
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