Indonesia scraps $5.9 billion biodiesel plans
07 April 2008
Indonesian palm oil growers are scrapping or amending plans to make
biodiesel after the commodity's surge to a record made the projects
unviable, executives say.
Sinar Mas and China National Offshore Oil have halted a $5.9 billion
biofuels plan, director Rafael Concepcion said yesterday. PT Bakrie
Sumatera Plantations was ''redesigning'' a biodiesel project, president
director Ambono Janurianto said.
Palm oil prices have more than doubled in the past year, undermining
the economic rationale for turning the vegetable oil into diesel even
as governments worldwide mandate greater use of alternative fuels. The
increased use of palm oil and other plants including sugar was meant to
stretch fossil-fuel supplies.
''Crude palm oil is very expensive now, it's impossible for companies
to make profit if it's used as biodiesel,'' said Alhilal Hamdi, head of
Indonesia's National Team on Biofuel.
''We are postponing it indefinitely as it's economically not
feasible,'' Mr Concepcion said, referring to the venture with China's
third-largest oil company. ''The price of the raw material alone is
already higher than the price of biodiesel.''
Palm oil futures in Malaysia, the global benchmark, touched a record
4486 ringgit ($A1510) a tonne yesterday, driven by increased investment
in agricultural commodities and rising demand. Palm oil is also used in
foods and as a cooking oil. China is the biggest importer.