Indonesian energy minster says fossil fuel subsidies to consumers hamper biofuels development

In Indonesia, Energy and Mineral Resources Minister Purnomo Yusgiantoro said that Indonesia biofuels growth is hampered by fossil fuel subsidies to consumers.

The President of Indonesia has stated that he will not raise fuel prices until at least 2009. Currently, fuel subsidies cost Indonesia $5.9 billion this year. The amount will be reduced in 2008 to US$4.9 billion by reducing the supply of subsidized fuel.

In September, a report appeared that the Isreal-based Merhavv Group will invest $700 million in jatropha cultivation in the East Nusatenggara province of Indonesia. The investment will support more than 220,000 acres of jatropha grown in the East Sumba district.

The move comes as palm oil price increases have put palm-oil biodiesel projects on hold in the region. Jatropha yields are as high as 1,000 gallons per acre, but the tree has a five-year growing period before it maximizes yield.

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