JAKARTA: The Indonesian government's proposal to ramp up biodiesel subsidies overcame its final parliamentary hurdle on Friday, an Energy Ministry official said, noting that the subsidy increase could take effect next month.
"The biodiesel subsidy is 4,000 rupiah per litre," Bio-energy and Renewable Energy Director Dadan Kusdiana told Reuters, noting that the government would use funding that had been allocated to subsidise diesel.
"Biodiesel consumption contributes 10 percent of the total targeted diesel consumption of 17.05 million kilolitres."
The new biodiesel subsidy will be applied after the government revises its regulation on a pricing formula for diesel, Kusdiana said. "Hopefully the new pricing (regulation) can be applied in March."
President Joko Widodo's government is looking to protect Indonesia's fledgling biofuel industry against lower crude prices and any increase in the subsidy could potentially boost demand for palm oil.
Earlier this week, an influential energy parliamentary committee and the Energy and Mineral Resources Ministry agreed to increase biodiesel subsidy to 4,000 rupiah per litre from 1,500 rupiah per litre now, and this has now been supported by the parliamentary budget committee.
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