The Significant Five Per Cent
Every time we fill up with petrol at a petrol station, there is one fact we rarely realise: that more than half of our vehicle’s tank is imported from other countries. The Ministry of Energy and Mineral Resources notes that throughout 2025, Indonesia’s dependence on petrol imports reached 60.18 per cent of total national demand. Most of this petrol import comes from Singapore and Malaysia. Imagine the hundreds of trillions of rupiah in foreign exchange that flow out of Indonesia every year.
However, in July 2026, for the first time in our energy history, a portion of that tank’s contents is planned to be replaced with a product of the homeland. Minister of Energy and Mineral Resources Bahlil Lahadalia, through Ministerial Decree No. 113.K/EK.05/MEM.E/2026 stipulated on 3 March 2026, has established a mandatory E5 policy (petrol blended with 5 per cent bioethanol) that will come into effect in July 2026.
The initial phase will be implemented on a limited basis at several points in seven regions, namely DKI Jakarta, West Java, Central Java, East Java, DI Yogyakarta, Bali, and Lampung, adjusting to the availability of local ethanol supply. The blend rate is then planned to increase to 10 per cent (E10) gradually starting in 2028.
The Minister of Energy and Mineral Resources also firmly stated that all bioethanol raw materials for this programme must originate from domestic production, with no imports. This clause is simple but changes everything. E5 is not merely an energy policy; it is a sovereignty policy for the Indonesian nation.
Why the Policy Must Be Implemented Immediately
First, the state’s coffers have already proven that biofuel blending policies save foreign exchange. The palm oil biodiesel programme (B35 in 2024 and B40 in 2025) according to the Ministry of Energy and Mineral Resources is estimated to have successfully saved Indonesia foreign exchange amounting to USD 17.19 billion, equivalent to Rp 271.78 trillion, over those two years.
In fact, if calculated since the biodiesel programme was launched in 2020, total foreign exchange saved according to the Ministry of Energy and Mineral Resources is estimated to have reached USD 40.71 billion by October 2025. The results can be seen on the ground, with Indonesia’s diesel imports dropping drastically from around 8.3 million tonnes in 2024 to only about 5 million tonnes in 2025, or just 10.58 per cent of national demand.
The same pattern will work for petrol through the E5 mandate, where every litre of ethanol blended into the public’s tanks is a dollar’s worth that continues to circulate in our economy, rather than flowing out.
Second, this is a quiet revolution for our farmers. Sugarcane, cassava, sorghum, and sago farmers will reduce their dependence on the kitchen economy, whilst also supporting the national fuel input needs.
As an illustration, the Ministry of Energy and Mineral Resources notes that the B40 biodiesel programme in 2025 absorbed more than 14,000 workers in the processing sector (off-farm) and 1.95 million farming workers (on-farm). A similar scale is expected to occur in the bioethanol industry once its supply chain grows fully – new jobs in villages, additional income for farmers, and an increasingly productive rural economic pulse.
‘But Won’t We End Up Importing the Raw Materials?’ - Here Is the Answer
This question sounds reasonable until we understand the policy architecture. Indonesia’s bioethanol industry ecosystem is not built on consumption sugar. Instead, it is built on molasses, namely the residue or ‘waste’ from sugar production. Thus far, molasses is a by-product of sugar factories with low economic value.
Every kilogramme of sugar we produce automatically generates molasses. So, the closer Indonesia gets to sugar self-sufficiency, the more abundant the bioethanol raw material becomes, rather than becoming an additional production burden.
The Ministry of Agriculture recorded national sugarcane production in 2025 reaching 39.07 million tonnes with a productivity of 69.35 tonnes per hectare, exceeding the Plantation Strategic Plan target. National sugar production in 2025 was 2.67 million tonnes, or 97.54 per cent of the self-sufficiency target. The Minister of Agriculture is also targeting sugar production to reach 3 million tonnes in 2026, a figure that will free Indonesia from white sugar imports.
To support this, the roadmap of Presidential Regulation 40/2023 mandates the addition of new sugarcane plantation land areas covering 700,000 hectares sourced from plantation land, smallholder sugarcane land, and forest area land, with expansion spreading to South Sumatra, Lampung, Sulawesi, and Papua.
Presidential Regulation Number 40 of 2023, which serves as the policy umbrella, is fully titled ‘Acceleration of National Sugar Self-Sufficiency and Provision of Bioethanol as Biofuel.’ The title alone answers the doubts – sugar self-sufficiency and bioethanol are a single, measured, directed policy package aimed at the people’s interests.
This Is Not a New Thing - It Has Existed for Almost Three Years
It is already available at around 170 Pertamina petrol stations on Java Island and will soon be available at around 200 petrol stations in the near future, a Pertamina product named Pertamax Green 95. This RON 95 petrol with a 5 per cent bioethanol blend has been marketed by Pertamina Patra Niaga since 24 July 2023.
During nearly three years of operation, its ethanol has come from a single source, sugarcane molasses processed by PT Energi Agro Nusantara (Enero), a subsidiary of PTPN I, in Mojokerto, East Java. Not a single litre of imported ethanol has been used, and its distribution has proceeded without significant supply constraints.
Enero’s current capacity is 30,000 kilolitres per year. In 2025, PTPN reported its ethanol production reached 32 million litres, exceeding installed capacity with 99.9 per cent purity, above the national fuel-grade ethanol standard of 99.2 per cent. Added to this are three fuel-grade producers with a total capacity of around 26,000 kilolitres per year.
The national ethanol industry as a whole is indeed large – installed capacity is around 300,000 kilolitres, but the majority is still of industrial quality and needs upgrading through the addition of purification units before it is suitable to become fuel.
In early February 2026, Pertamina together with Sinergi Gula Nusantara undertook the development of a molasses-based bioethanol plant in Glenmore, Banyuwangi, which is projected to supply 30,000 kilolitres per year.