GOVT YET TO SET REFERENCE PRICE OF BIOFUEL

Jakarta, May 28 (ANTARA) - Indonesia has not yet set a reference price (HP) for biofuel energy while at present the market price for the commodity is Rp9,000 per liter, a biofuel producer said.

Chairman of the Indonesian Biofuel Producers Association (APROBI), Purnardi said here on Wednesday that Rp9,000 per liter of biofuel is too high for the public, while it would be no problem for industries.

He said that the reference price would depend on the government. The Ministry of Energy and Mineral Resources was now formulating a government-sanctioned biofuel reference price.

Purnardi said that the Rp9,000 per kg was too high for public consumption and therefore if the Rp9,000 would be set as a reference price, the government should provide a subsidy.

In an effort to promote the use of biofuel, APROBI would propose to the government a subsidy of Rp2,000 per liter, he said.

The APROBI chairman said that whether the subsidy would be high or low would depend on the price of raw materials which would be used to produce biofuel.

Most of the raw materials used to produce biofuel in Indonesia include cassava and molasses. "While actually we have a big potential for the production of biofuel, particularly biodiesel and bioethanol," he said.

At present, biofuel development could now meet the minimum mandatory production at home, so that Indonesia would save on foreign exchange, improve the environment and health.

APROBI sets itself a target of producing 214,541 kiloliters of bio-ethanol in 2010. This year the country's bio-ethanol production capacity reached 93,000 kiloliters.

In the meantime, the government is proposing an allocation of Rp1.554 trillion in bio-fuel subsidy in the 2010 state budget.

Director General for oil and gas Affairs Evita Legowo told a hearing with House Commission NII for energy affairs here on Wednesday that the subsidy allocation consisted of Rp429 billion in biodiesel subsidy and Rp1.125 trillion in bio-ethanol subsidy.

"The volume of the bio-fuel (BBN) which would be subsidized in the 2010 state budget consisted of 214,541 kiloliters of bio-ethanol and 562,534 kiloliters of bio-diesel," the director general said.