Indonesian state-owned energy firm Pertamina (PERTM.UL) is set to increase the ethanol content in its gasoline products as part of its strategy to provide eco-friendly fuel alternatives to the public. Pertamina's CEO, Nicke Widyawati, revealed the company's plans during a parliamentary hearing on Monday.
The initiative will involve blending ethanol with Pertamina's widely-used 90-octane gasoline, branded as Pertalite. The new mixture will consist of 7% ethanol, a move expected to enhance the overall quality of the fuel. Additionally, Pertamina will raise the ethanol blend percentage in another product, Pertamax Green 95, from the current 5% to 8%. This specific fuel variant is presently available at select fuel stations in Jakarta and Surabaya, the two largest cities in Indonesia.
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To facilitate the increased ethanol usage, Pertamina will import the biofuel, as domestic production of ethanol from sugar molasses remains limited. The country's current annual output of fuel-grade ethanol is approximately 63,000 kilolitres. While the specific import quantities were not disclosed by Pertamina, the company emphasized the shift to ethanol blends as a means of reducing emissions compared to traditional gasoline.
“We are still importing gasoline, so we are just replacing some gasoline imports with ethanol, which is better in terms of emissions,” stated Nicke.
The distribution strategy for the ethanol-blended products across Pertamina's network of petrol stations has yet to be finalized. Fadjar Djoko Santoso, the spokesperson for Pertamina, confirmed that the company has not made a decision regarding the extent of biofuel distribution in the coming year.
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The move towards higher ethanol blends prompts questions about potential impacts on Indonesia's fuel subsidies. Currently, the government provides subsidies for Pertalite sales to maintain a stable price of 10,000 rupiah (65.6 U.S. cents) per liter. Nicke clarified that Pertamina has not engaged in discussions with the government regarding the subsidy implications of this plan.
Concurrently, President Joko Widodo has unveiled an agricultural goal to cultivate 700,000 hectares of sugarcane, aiming to bolster sugar production. Nicke Widyawati believes that this concerted effort could yield up to 1.2 million kilolitres of ethanol for use as fuel.
