Get Ready: Indonesia to Have New Bioethanol Plant, Construction to Begin This Year

Jakarta, CNBC Indonesia - Deputy Minister of Investment and Downstreaming/Deputy Head of BKPM Todotua Pasaribu stated that Pertamina New & Renewable Energy (Pertamina NRE) and Toyota will build a bioethanol plant in Indonesia this year, with a maximum target of Q4 2026. “This is almost done, so construction will begin this year. Target in Q3, maximum in Q4 this year,” he said at the BKPM Building in Jakarta on Monday (20/4/2026). He explained that the government is providing incentives for all investments in Indonesia, including the bioethanol project, as it is a strategic government programme. The Ministry of Energy and Mineral Resources has issued new regulations on the phasing of biodiesel and bioethanol blending. This is contained in Ministerial Decree No. 113.K/EK.05/MEM.E/2026 on the Phasing of Utilisation of Vegetable Fuel. Bioethanol blending is targeted at 5% (E5) in 2026-2027. Then, it will rise to 10% (E10) in petrol fuel starting in 2028. The project is expected to support national energy needs while reducing dependence on imported fuel oil (BBM). In the initial phase, the plant’s production capacity is planned at 60,000 kilolitres (kl) per year. This also serves as preparation to meet future fuel needs. “For the start, the production capacity is for a plant of 60,000 kilolitres per year. We know that the total consolidation of existing ethanol plants in Indonesia is around 120,000. Even, possibly only effectively 80,000,” he said. As is known, the government is providing full support for bioethanol development, including through mandatory biofuel blending policies with a roadmap of E5 in 2026-2027, E10 in 2028-2030, and long-term targets towards E20. “Of course, we are doing this in the framework that we must prepare if we later enter the mandatory E10, our country is also ready to provide the ethanol needs,” he explained. He admitted that regarding the investment amount, the cost calculation is still ongoing. “The budget is still in progress because a feasibility consultant has already been appointed,” he added. The collaboration between Pertamina and Toyota focuses on developing bioethanol with 2G or second-generation technology based on multi-feedstock, utilising domestic resources such as palm biomass, corn, and sorghum. According to him, the collaboration between Pertamina and Toyota creates synergy between SOEs and global investors in building Indonesia’s future energy ecosystem. With this agreement, the cooperation process has moved from the exploration stage to a more concrete and measurable phase, providing clearer direction for project realisation. “This programme has actually been running since last year. But we were silent on the development. There is already a cooperation plan between Pertamina New Renewable Energy and the Japanese Group. In this case, Toyota Tsusho will be appointed as the partner,” he said. He mentioned that the bioethanol development plan will be carried out in the Lampung region. Because Lampung is one of the provinces with strong availability of feedstock for ethanol. “Because in Lampung, as we all know, there is large-scale sugarcane planting. And there is also cassava planting and other feedstocks. So, the plan is not only for building the plant but also for planting one of the support feedstocks, namely sorghum,” he explained.