But this is an increasingly strenuous undertaking for the Indonesian government. Its oil palm plantation fund management agency BPDPKS supports the B30 mandate by bridging the gap between prices of conventional diesel and locally-produced palm oil biodiesel. The price difference between these products has grown to INR3,732 per litre, from just INR444 per litre in 2019. Reported to have only around INR19 trillion at the end-December 2019, analysts estimate that BPDPKS may be unable to support the 9.6 million kilolitres of biodiesel needed to meet B30.
SINGAPORE (May 22): The Covid-19 outbreak caused some worries in the palm oil market. However, as a staple ingredient, the combination of low stockpiles and attractive pricing relative to close substitutes such as soybean means that steadily improving demand from Europe and China should be limiting the extent to which prices will go down further, analysts say.
On May 18, the Indonesian government announced renewed funding of the B30 Biodiesel programme. Some INR2.78 trillion ($269.6 billion) will be used to fund the 30% biodiesel mix of fuel oil sold in Indonesia, providing further support for palm oil producers. In addition, the levy on palm oil export will be raised to US$5 ($7.10) per tonne, generating another INR0.76 trillion to help fund the programme, which is expected to reach a total of INR3.45 trillion.
