The Indonesian government has officially updated the B20 regulation unveiled earlier in August 2018 and requires all regular diesel fuels used in the country to contain at least a 20% biodiesel component starting from September 2018. The update gives the country more leeway to subsidise the price gap between biodiesel and petroleum-based diesel fuel. Subsidies will not only be provided to Public Service Obligation (PSO) sectors such as certain types of transport and power stations, but will now be extended to all sectors.
So far, the petroleum-based diesel retail price stands at IDR5,150/l (roughly US$3.5c/l), while the biodiesel price amounts IDR7,600/l (US$5.2c/l). Indonesia imports a significant portion of its crude oil requirements and the recent oil prices rise combined with the rupiah weakening has made them quite expensive. Therefore, the B20 diesel blending regulation will boost domestic palm oil consumption, support the rupiah and help to reduce diesel fuel imports.