With Excise Issues Resolved, Path for Ethanol-Blended Petrol Policy Becomes Easier
The Ministry of Energy and Mineral Resources (ESDM) has revealed that the obstacles regarding excise levies for bioethanol as a blending component for Fuel (BBM), specifically petrol, have been resolved. The removal of bioethanol excise is considered a vital stimulus to accelerate the implementation of plant-based energy blending within the national transport sector.
The Director General of New, Renewable Energy, and Energy Conservation (EBTKE) at the Ministry of ESDM, Eniya Listiani Dewi, explained that the excise constraint was successfully overcome through coordination with the Ministry of Finance. The abolition of this levy is expected to make it easier for PT Pertamina (Persero) to implement the green petrol mandatory programme more effectively in the field.
“At this time, we can convey that for the implementation of bioethanol, there is no longer any excise. Therefore, the excise issue has been resolved with a Minister of Finance Regulation and currently, the excise has been abolished, which will facilitate our colleagues at Pertamina in implementation,” Eniya stated during a Hearing Meeting (RDP) with Commission XII of the Indonesian House of Representatives (DPR RI), Jakarta, Tuesday (8/9/2026).
The government has also drafted a roadmap for bioethanol utilisation, requiring all petrol blending business entities to perform blending. In 2026, a 5% blending mandate (E5) will be implemented across Java, with a target to increase to 20% (E20) by 2028.
“In accordance with the direction of the Minister of ESDM, E20 is targeted for 2028. The goal of accelerating the bioethanol mandate is certainly to reduce petrol imports and support energy transformation in the transport sector,” she explained.
The requirement for pure bioethanol is projected to surge alongside the increase in blending levels. For 2026, with a projected demand for non-PSO petrol of 6.65 million kilolitres (kl), the government requires a bioethanol supply of 333,000 kl, which is expected to rise to 1.39 million kl by 2028.
“In 2026, the mandate will be 5%; in 2027, a minimum of 5% so that if it rises to 10% it will be better; in 2028, a minimum of 10% so that if the target is 20% it will be far more optimal,” she added.
Currently, bioethanol production capacity has only reached 70,500 kl per year from five existing factories. To bridge the supply gap, the ministry is encouraging the acceleration of investment for the construction of 20 new factories by 2027 so that domestic raw material needs can be met independently without imports.
“I want to encourage ethanol investment as quickly as possible; our calculation is that by 2027, there must be 20 factories. For the feedstock for next year, for E10 alone, we need approximately 1.2 million, if I am not mistaken. However, we can currently only account for 70,500 kilolitres per year,” she concluded.