PALMOILMAGAZINE, BALI – Pertamina Patra Niaga is closely monitoring the impact of rising Fatty Acid Methyl Ester (FAME) prices on the industry, as Indonesia continues its mandatory biodiesel program. Samuel Hamonangan Lubis, Industrialization Sales Manager at Pertamina Patra Niaga, revealed that since October last year, FAME prices have exceeded diesel prices, affecting the supply and consumption dynamics of biodiesel in the industrial sector.
“At the start of this program, FAME was cheaper than fossil fuels, leading to cost savings. However, its price is now significantly higher, with a difference of over IDR 5,000 per liter. This has resulted in a decline in biodiesel consumption, especially after the blend increased from B35 to B40,” Samuel explained to Palmoilmagazine.com in February 2025.
He also noted that diesel fuel imports are regulated by the government with strict quotas. “With increased domestic production, the goal is for Indonesia to achieve energy self-sufficiency, reduce imports, and strengthen national energy security,” he added.
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However, policy changes in subsidies present new challenges for industries. Since January 1, incentives for sectors such as hospitality, mining, and plantations have been discontinued, forcing them to bear the full price difference of biodiesel. “The price gap between FAME and diesel increased by around 25% from December to January, significantly impacting industrial operational costs,” he said.
On the retail side, biodiesel prices at gas stations remain regulated under subsidies from the Palm Oil Plantation Fund Management Agency (BPDPKS). However, for industries that no longer receive incentives, rising prices could substantially increase their operational expenses.
Pertamina Patra Niaga continues to coordinate with the government and industry players to find the best solutions. “We understand that industries expect additional incentives, but ultimately, the decision lies with the government. Our role is to implement policies in accordance with regulations,” Samuel concluded.
As price fluctuations persist, industries are urged to adapt their strategies to manage rising fuel costs. Meanwhile, the government continues to evaluate necessary measures to balance energy sustainability with industrial stability in Indonesia. (P2)
