To reduce over-dependence on oil & cut costs, PLN - the Indonesian govt. owned firm - will use biofuel to run power plants in the county.
In efforts to reduce Indonesia's reliance on oil, PLN (Perusahaan Listrik Negara), state-owned energy firm will begin using biofuel from 2007 to fuel 114 small & medium scale power plants in the country.
Chief commissioner of PLN, Alhilal Hamdi said that the plan has seen approval following success of projects for using biofuel in Lampung & Nusa Pendia power plants, earlier in 2006.
As per research by government's application agency, govt. could save up to US$ 280 Million if it makes greater use of PPO (Pure Plant Oil). Diesel & biodiesel price for industrial utilization cost around 6 US cents per liter whereas for PPO, cost is only 4.3 US cents per liter.
PPO costs are lower as it makes use of vegetable oils (jathropa or palm oil), without need for chemical additives or additional processes, unlike biodiesel that requires methanol & glycerin additions.
Indonesian oil reserves have been drying faster than the discovery process of new oilfields. Indonesia has already used up its largest & most accessible reserves.
Concerns were raised last year regarding country's over-reliance on oil imports and there was fear that without fresh investments in energy sector, the country may end up being a net importer of oil. The country later became a net importer of oil, as firms were refraining from investments in new reserves due to red tape, past political chaos & legal uncertainties in the sector.
An industry analyst at RNCOS said, "Problem is that Indonesia's energy resources have depleted & there have been no major investments for discovering new ones. Hopefully, new investments in biofuel industry will help Indonesia in addressing its energy woes."
In September 2006, govt. pledged to make investments worth US$ 1.4 Billion & allocate around 500,000 hectares land in 2007 to encourage development in Indonesian biofuel industry. PLN will start testing biofuel powered cars from December 12 - 21, 2006.
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