Jan. 20 (Bloomberg) — Indonesia will temporarily freeze the allocation of subsidies for the mandatory palm oil biodiesel and replanting program as the palm oil fund management agency (BPDPKS) is being restructured. Official Ahmad Maulizar said the agency is undergoing restructuring after taking over the management responsibilities of the Cocoa and Coconut Funds, and is awaiting a new organizational structure and working system, with the transition period expected to be completed as soon as possible.
The BPDPKS funds programs such as mandatory biodiesel, replanting, and research through an export tax on palm oil products. It has also been asked by the government to support the cocoa and coconut industries, including funding replanting programs, but specific details have not been disclosed.
Meanwhile, Indonesia is pushing ahead with biodiesel policy reforms to increase palm oil blending from 35% to 40% (B40). Last November, BPDPKS warned that the higher blending ratio would lead to a 68% increase in subsidy requirements. To mitigate costs, the government plans to subsidize only about 7.55 million kiloliters of biodiesel this year, out of a total of 15.6 million kiloliters.
Ernest Gunawan, secretary general of the Association of Biodiesel Producers (APROBI), believes that biodiesel distribution will not be affected if the subsidy freeze does not last more than three months. Goulart Manulong, chairman of the Palm Oil Smallholders Association (Apkasindo), said the government has allocated funds to replant 120,000 hectares of palm oil, although no official notification has been received.