Indonesia's state palm oil company to develop biodiesel complex in Papua in 2028
Indonesia's state palm oil company Agrinas Palma Nusantara plans to develop a biofuel production complex in the Papua region, aiming to produce biodiesel entirely from palm oil, a company director said in an interview with CNBC Indonesia on Thursday.
Agrinas, formerly a state construction consultant, emerged as the world's largest palm oil company by land size this year after it received 1.5 MM hectares (3.7 MM acres) of plantations from the government.
These plantations were seized by authorities because their previous owners lacked proper permits or faced legal issues.
"Agrinas' energy reserve will be in Papua ... because the land is good, the soil is fertile. The land size for development is very ideal for developing biodiesel from upstream to downstream," Mohammad Wais Fansuri, Agrinas' finance and risk management director, said.
The firm has hundreds of thousands of hectares of concession in Papua, the easternmost region of Indonesia, and is conducting a feasibility study for the project.
The company aims to launch development in 2028 or 2029, Fansuri said.
Agrinas has been assigned by President Prabowo Subianto to produce enough palm oil to meet rising demand for mandatory biodiesel blending, Fansuri said, with the goal of increasing the bio-content to eventually achieve 100% palm oil-based biodiesel, known as B100.
Indonesia's current mix of 40%, known as B40, is already the highest mandatory biodiesel blending globally.
Agrinas is also tasked to bolster state-controlled production of cooking oil, Fansuri said. Agrinas and another state-owned palm oil grower PalmCo will produce enough cooking oil to cover 30% of the domestic market next year, he said.
Fansuri said the firm is managing the plantations on behalf of the government but legal ownership could be formalized soon through a presidential decree expected from Prabowo. He said Agrinas expects to manage around 3 MM hectares by 2029.
The company also expects a capital injection from its parent firm, sovereign wealth fund Danantara Indonesia, to finance plantation revitalization and other investments, Fansuri said.
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