Cooking oil producers assured of CPO supply

JAKARTA (JP): Minister of Forestry and Plantations Sumahadi gave assurances yesterday that the country's three state cooking oil producers would continue to receive a supply of crude palm oil (CPO) from state plantation companies.

Sumahadi said that state plantation companies PT Perkebunan Nusantara (PTPN) I through to XIV would continue to provide 39,200 tons of CPO each month to the cooking oil producers.

He said the recent appointment of 14 private refining companies to process CPO produced by state plantation companies was designed to ensure that smaller private refineries received a fair share and to prevent big companies from monopolizing CPO refining.

"We did not tender the contracts to process CPO because if we had, only large refining companies would have won," the minister said.

PTPN currently produces about 1.9 million tons of CPO every year, approximately 30 percent of the country's total production.

There are three state cooking oil producers, PTPN II, which has a processing capacity of 5,200 tons per month, PTPN IV, which has a processing capacity of 14,000 tons per month, and PT Perkebunan Agrintara (a joint venture between all the state plantation firms), which has a processing capacity of 30,000 tons per month.

Sumahadi issued a directive announcing the appointment of 14 private refining companies earlier this week. The refineries are located in Jakarta, Surabaya in East Java and Medan in North Sumatra.

The three state cooking oil producers were not among those appointed. They usually receive a monthly CPO supply of 39,200 tons from the 14 state plantation companies.

"Olein produced by the appointed refineries will be used by Bulog (the State Logistics Agency) to stabilize cooking oil prices on the domestic market," Sumahadi said in his directive.

Company executives from the state cooking oil producers questioned the appointments, saying that the directive might result in a new monopoly for Bulog.

But Sumahadi refuted this suggestion yesterday. Bulog would not be the sole distributor of olein produced by the appointed refineries, cooperatives would also be allowed to distribute the produce, he said.

Cooking oil producers buy CPO from plantation companies before processing it into olein. One hundred kilograms of CPO can be processed into 70 kg of olein.

Indonesia is the world's second largest producer of CPO after Malaysia. The country's total production of CPO this year is expected to reach 5.9 million tons. Only 3.5 million tons are required to meet domestic demand.

There are currently 65 cooking oil producers operating in the country. They hold a combined annual processing capacity of 4.2 million tons. (gis)