Indonesia is set to construct a methanol plant worth USD 1-1.2 billion (approximately IDR 19.08 trillion) in Bojonegoro, East Java, starting in 2025, according to Minister of Energy and Mineral Resources (ESDM) Bahlil Lahadalia. The facility, with an annual production capacity of 800,000 tons, aims to reduce Indonesia's reliance on methanol imports, which currently account for 80% of domestic demand. Speaking after a meeting with Commission XII of the House of Representatives (DPR RI) on Monday, 02/12, Bahlil emphasized the plant’s strategic role in supporting biodiesel programs like B40 and B50, which will increase methanol consumption. Methanol is a key component in producing Fatty Acids Methyl Esters (FAME), a biodiesel raw material essential for advancing Indonesia’s energy transition.
Additionally, Deputy Minister of Agriculture Sudaryono noted that crude palm oil (CPO), the primary raw material for B50 biodiesel, is sufficiently available domestically. Indonesia produces 46 million tons of CPO annually, with 20 million tons allocated for local needs and 26 million tons for export. However, implementing B50 will require diverting 5.7 million tons from export to domestic biodiesel production. This shift is expected to reduce solar imports, potentially saving IDR 266.5 trillion in foreign exchange. Despite the potential loss of export revenue, Sudaryono believes the long-term benefits, including energy independence and reduced fuel imports, outweigh the costs. "Although there is a sacrifice of 5.7 million tons of CPO exports, the economic gain from B50 implementation justifies the decision," he concluded.
