Boosting Bioethanol Petrol Development, Bahlil Prepares Pricing Scheme

Energy and Mineral Resources (ESDM) Minister Bahlil Lahadalia said his ministry is preparing a pricing formulation and incentive scheme, particularly to support the bioethanol blending programme for petrol fuel.

Bahlil explained that the bioethanol financing mechanism will not be entirely the same as the biodiesel funding scheme through the Palm Oil Fund Management Agency (BPDP). Nevertheless, the government is drafting a formula to keep bioethanol prices competitive without harming either industry or farmers.

He noted that bioethanol uses different raw materials from biodiesel. Biodiesel is produced from palm oil via Fatty Acid Methyl Ester (FAME), which is then blended with diesel, whilst bioethanol comes from agricultural commodities such as maize, cassava and sugarcane, which are then blended with petrol.

“For ethanol, there are three feedstocks: maize, cassava and sugarcane. Sugarcane usually goes into molasses. Now, we will set their prices directly, but we will create a sort of economical price so that farmers also earn a good income,” Bahlil said when met at the Ministry of Energy and Mineral Resources, quoted on Tuesday (4/8/2026).

Bahlil revealed that the government plans to set the bioethanol price at a level that still provides profit for farmers. At present, bioethanol stands at around Rp11,000 per litre, whilst petrol reaches about Rp16,000 per litre, so the use of bioethanol is still considered economical.

However, he acknowledged that challenges would arise if global oil prices fall, making petrol cheaper than bioethanol. In such a situation, a price gap would emerge that needs to be anticipated through the mechanism currently being drafted by the government.

“But when world oil prices fall, for example to Rp9,000 or Rp10,000, with ethanol at Rp11,000, there would be a difference of Rp1,000. Well, this is what we are going to shape. We will create a sound formulation in the interests of industry, farmers and the state,” he said.

Earlier, President Prabowo Subianto declared that the government would accelerate the development of bioethanol-based biofuel. Indonesia is even targeted to follow in the footsteps of India and Brazil in utilising ethanol as a petrol blend.

Prabowo made the remarks while leading the Simultaneous Grand Harvest Across Indonesia Together with the TNI in Malang, East Java, on Friday (17/7/2026).

Prabowo said Indonesia currently has the capability to move towards E10, or petrol with a 10% ethanol blend. Indonesia even has the potential to raise the ethanol blend content up to E20.

“I saw at the exhibition earlier that we are already able to move towards E10, ethanol 10, meaning petrol will later be blended with 10% ethanol, but earlier the officials said we can reach E20. It requires factories; the one we own now is just one factory, so I decided we will build at least 30 factories, if necessary up to 50 factories,” he said.

Prabowo then compared the development of bioethanol use in several countries. According to him, India has already implemented E20, whilst Brazil has even used E100, or fuel based on pure ethanol.

“India is already at E20, India is already at E20, Brazil is already at E100. How could Indonesia not be able to do it? Indonesia can, right? Can we? We can,” he said.