$12.4B earmarked for Indonesian biofuel

The Jakarta Post is reporting that a consortium of 59 energy firms and institutions have signed memoranda of understandings (MOUs) to invest the equivalent of $12.4 billion USD to further biofuel development in Indonesia.

According to the article, the firms include CNOOC, Hong Kong Energy and Malaysia-based Genting Energy, as well as the Bandung Institute of Technology (ITB), Bogor Institute of Agriculture (IPB) and the Research and Development Division of the Indonesian Ministry of Energy and Mineral Resources.

CNOOC and Hong Kong Energy have commitments to invest $5.5 billion to develop biofuel in Indonesia, while Genting Energy is committed to invest $3 billion, the newspaper reported.

Aside from the MOUs, banks are also expected to disburse 25 trillion Indonesian Rupiah ($2.7 billion USD) in loans to help finance local farmers in their efforts to grow feedstock.

While the government is focusing on jatropha, a hardy drought-resistant shrub that produces an oil convertible into fuel, for feedstock, the bulk of Indonesia's biofuel production in the short term is expected to come from palm oil-based biodiesel produced by the private sector.

Jatropha, which is believed to originate from South America, already grows wild in parts of Indonesia. It's a shrub which normally grows 3-5 meters (10-16 ft). It can also be grown on land damaged by fire and over cultivation, according to experts.