October 28, 2025 | 05:52 pm
TEMPO.CO, Jakarta - Indonesia’s Minister of Energy and Mineral Resources (ESDM), Bahlil Lahadalia, has dismissed public concerns that the government’s B50 biodiesel program could trigger a cooking oil shortage due to higher crude palm oil (CPO) consumption.
“There’s no issue of cooking oil scarcity,” Bahlil said, as quoted by Antara on Tuesday, October 28, 2025.
Both cooking oil and biodiesel rely on CPO as their main raw material. Under Minister of Trade Decree No. 1531 of 2022 on Domestic Market Obligation (DMO) and Domestic Price Obligation (DPO) for CPO and cooking oil, national cooking oil production requires around 416,000 tons of CPO per month, or roughly 4.99 million tons per year.
Meanwhile, the B50 mandatory program, which blends 50 percent biodiesel with fossil diesel, will need about 5.3 million tons of CPO annually.
To maintain adequate supply, Bahlil said the government is preparing three strategies: intensifying production on existing plantations, opening new oil palm land, or reducing exports through the DMO mechanism.
“By applying the B50 policy, we could reduce exports slightly to secure domestic needs. That’s one of the alternatives,” he said.
CPO Export Reduction Under Review
Minister of Agriculture Andi Amran Sulaiman also stated that the government plans to cut CPO exports by up to 5.3 million tons to support the B50 program’s rollout in the second half of 2026.
According to him, Indonesia’s total CPO production currently stands at 46 million tons per year, of which 20 million tons are processed domestically and around 26 million tons exported abroad.
Experts Warn of Risks to Palm Oil Industry
However, experts have urged the government to carefully assess the economic impact before moving forward.
Bayu Krisnamurthi, an agribusiness professor at the Bogor Agricultural University (IPB), warned that raising the biodiesel blend from B40 to B50 could increase subsidy burdens, suppress CPO exports, and push up cooking oil prices.
“If not handled carefully, the competitiveness of Indonesia’s palm oil industry could decline,” Bayu said.
Bayu noted that while the B50 program could save up to Rp172 trillion in foreign exchange from reduced diesel imports, it might also result in Rp190 trillion in lost export revenue from lower CPO sales abroad.
“There must be a balance between energy targets, export performance, and farmers’ welfare,” he added.
“Indonesia’s palm oil industry is very strong. Let’s not be the ones to weaken it.”
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