Ethanol excise exemption to expand Pertamina's biofuel production capacity

Pertamina Patra Niages has stated that the pending application for an ethanol excise exemption could expand the corporation’s capacity to produce plant-based fuels.

“We have also submitted a request to the ministry for support regarding the ethanol excise exemption, which is currently being processed,” said Eko Ricky Susanto, Director of Retail Marketing at Pertamina Patra Niaga, during a national media briefing at the Rewulu Fuel Terminal in Yogyakarta on Friday.

According to him, if the ethanol excise is waived to support the energy transition, the company could increase the number of terminals for eco-friendly fuel production, specifically in western Java, Jakarta and its surroundings, and central Java. This expansion would facilitate easier distribution, particularly within the Java region.

“Our current priority remains Java, as the ethanol production base is located in Mojokerto, although there are plans to develop three to four new ethanol plants to support the ethanol ecosystem,” he said.

Regarding the development roadmap, he added that the 5 per cent bioethanol mandate is set for 2026, with plans to potentially increase it to 20 per cent. “There are stages we must prepare, including the development of the supporting ecosystem, services, and infrastructure, as these changes require time,” he added.

Previously, Pertamina noted that the ethanol excise remains one of the primary obstacles to bioethanol development, as current exemptions are largely limited to beverage products. Currently, an exemption is only available at one location in the Surabaya Integrated Terminal; however, with excise rates reaching Rp20,000 per litre, the economics of bioethanol remain uncompetitive unless regulatory hurdles are simplified.

On the other hand, the state-owned oil and gas company possesses approximately 120 fuel terminals with the potential to perform bioethanol blending. Meanwhile, the Ministry of Energy and Mineral Resources (ESDM), in a meeting with Commission XII of the Indonesian Parliament on Tuesday (8/9), ensured that ethanol for biofuels would not be subject to excise, ensuring that taxes do not burden the development of bioethanol.