Palm-Oil Plantation Fund: Procedures and Requirements for the Procurement of Biodiesel

The Minister of Energy and Mineral Resources (“Minister”) has issued Regulation No. 29 of 2015 on the Procurement and Utilization of Biofuel in the Form of Biodiesel for the Purposes of Financing by the Palm-Oil Plantation Fund Management Agency (“2015 Regulation”).The 2015 Regulation redefines the procedures and requirements for Biodiesel producers (“Biodiesel Producer”) who are looking to apply for palm-oil funds [1] for the production of biodiesel. This biodiesel will be then distributed to oil-fuel producers (“Fuel Producer”) to be mixed with conventional (fossil-based) diesel fuel.Prior to the 2015 Regulation, this same matter was regulated under Regulation No. 26 of 2015 (“26/2015 Regulation”).The 2015 Regulation is of relevance to producers of biodiesel fuel, as well as producers of conventional fuel.Mandatory Biodiesel MixPursuant to Ministerial Regulation No. 32 of 2008 on the Provision, Utilization, and Commercial Procedures for the Use of Biofuel as an Alternative Fuel (“2008 Regulation”), [2] Fuel Producers are required to mix their fossil diesel fuel with biodiesel.In order to achieve this objective, a Fuel Producer is required to appoint a Biodiesel Producer to supply the requisite biodiesel. [3] The market-price index differences between diesel and biodiesel as regards the production of biodiesel are to be covered through the use of palm-oil funds collected by the Palm-Oil Fund Management Agency (“Agency”). [4] The procurement of biodiesel is to be carried out every six months and must be publicly announced at least 30 days prior to the procurement date. [5] Requirements for Biofuel ProducersIn order to apply for palm-oil funding, Biofuel Producers must first secure a Registration Certificate from the Director General of New and Renewable Energy (“Director General”) at the Ministry of ESDM. [6] To secure this certificate, a Biofuel Producer must satisfy the following requirements: [7]