Sarinah to begin exporting cassava

Antara News, Sun, February 13 2011

Jakarta (ANTARA News) - State-owned company PT Sarinah is increasing the number of its trade commodities by purchasing cassava from farmers and exporting it for cattle fodder to China.

PT Sarinah President Director Jimmy M Rifai Gani said here on Sunday that his company was buying cassava from farmers in Central Java`s Cilacap district to meet the need for the commodity from China.

"So far, we have actually planned to export it to South Korea which will re-export the commodity to China. We have not yet met importers in China," he said.

He said that his company would sign a contract agreement with an importer from South Korea. "The first shipment is expected to be carried out in April with a volume of 5,000 tons worth Rp10 billion," he said.

PT Sarinah, he said, will export 5,000 tons of cassava every month to China through an importer in South Korea.

Jimmy said that China had demanded for 13,500 tons of cassava for cattle fodder per month but for the time being his side could only met half of it because his firm had not yet found suppliers at home.

"That is why we are trying to find suppliers in other regions. We will look for ones in Lampung province," he said.

He said that in the long run PT Sarinah will develop cassava farmers in regions so that they would be able to provide supplies for the export needs."This is because most of cassava plantations are cultivated in small scales," he said.

Editor: Aditia Maruli

Plantation firms to produce biodiesel for Pertamina

Nani Afrida, The Jakarta Post, Jakarta, Fri, 04/09/2010 10:53 AM

Renewable energy: State-owned oil-and-gas company PT Pertamina president director Karen Agustiawan (right) talks to state-owned electricity company PT PLN president director Dahlan Iskan (left) while State-Owned Enterprises Minister Mustafa Abubakar listens at the ministry, on Thursday. The companies signed two separate MoUs with state-owned plantation companies PTPN and PT Rajawali Nusantara Indonesia and state-owned forestry firm PT Perhutani on renewable energy. JP/P.J. Leo

Three state plantation firms – PT Perkebunan Nusantara (PTPN) III, IV and V — will begin the construction of three biodiesel plants in Dumai, Riau province, before the second half of the year starts.

The three plants are expected to absorb Rp 400 billion in total investment.

“The plants will be finished in the next 18 months. In 2012 the plants will start producing biodiesel,” PTPN IV president director Dahlan Harahap said on the sidelines of the signing of an MoU between the three firms with state oil and gas producer PT Pertamina on Thursday.

Pertamina has agreed to purchase the biodiesel from the plants and to prepare a storage facility for the biodiesel at the port in Dumai.

Dahlan said each of the plants has a capacity to process 100,000 tons of oil palm fruit bunches (TBS) annually. The capacity is expected to be doubled by 2014.

“If the demand keeps increasing, the capacity may jump to 1 million tons of TBS every year,” he said.

Dahlan said about 30 percent of the investment needed to construct the plants would come from the companies’ internal cash flow and the rest from bank loans.

Biofuel is currently being sold to retail customers. In 2008, Pertamina had 279 petrol stations selling biofuel while PLN has also used biofuel to help power nine of its power stations. These nine stations have a total capacity of 96 megawatts (MW).

Currently Indonesia has produced two types of biofuel: bioethanol — made from cassava, sugarcane and sweet sorghum, and biodiesel — made from castor, crude palm oil and jatropha.

By 2015, Indonesia plans to have 10 million hectares of palm oil plantations, up from 7.9 million today.

According to studies by state plantation companies, there are 44 million hectares of land in the country ideal for palm oil plantation. Using conservative yield estimates, this area of oil palm plantation could produce 145 billion liters per year of biodiesel, or 10 percent of current fossil diesel demand.

Besides planning to produce biodiesel, the state plantation firms also plan to produce electricity from biomass-generated power plants and sell it to state electricity company PT PLN.

To produce electricity power in the CPO factories, one factory will require between Rp 30 billion and Rp 40 billion in investment. Dahlan said PTPN IV currently operates 50 factories, with each one potentially able to generate 3 MW of power from biomass, mostly from the Empty Fruit Bunches (EFB) and any other available biomass waste.

PLN will be obtaining electric power from CPO plantations from power generated from biomass (EFBs) while Pertamina will obtain biofuel processed from the CPO itself.

“At the present, only two factories are ready to produce 6 MW in total of electricity power,” he said.

CPO is playing an increasingly important role in Indonesia today with the demand for the product increasing which not only for food consumption and other uses but also as an energy supply crop.

The Indonesian Palm Oil Producers Association (GAPKI), consists of about 370 CPO producer firms making use of about 2.4 million hectares of oil palm plantations. They, along with many smaller farmers, are aiming to produce at least 25 million tons of CPO this year, up by 25 percent from last year’s production target of 20 million tons.

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China, Japan eager to develop Indonesia`s bioenergy

Jakarta (ANTARA News) - China and Japan have expressed interest in developing Indonesia`s biofuel and renewable energy, an official said.

"Japan and China are eager to develop bioenergy in Indonesia. As a matter of fact, China has many times sent its delegation to Indonesia for that purpose," Chairman of the Indonesian Cooperatives Council (Dekopin) Adi Sasono said on Thursday.

Indeed many developed countries regard Indonesia as a potential producer of biofuel and renewable energy, not to mention its spices, he said.

"We have the potentials to invite foreign investors, the more so because they regard Indonesia as the main source of green energy," he said.

The Dekopin chief said Chinese and Japanese delegations will soon visit Indonesia to explore possibilities of investment in the sector.

The two countries are determined to reduce their dependence on fossil-based energy and to meet 10 percent of their energy needs from renewable sources, he said.

"We are rich in sources of green energy particularly from sugar cane, cassava and jatropha curcas," he said.

Indonesia now has an estimated 20 million hectares of idle land suitable for the cultivation of such plants, he said.

Quantum to invest US$250 million on biofuel developments in Sumba

The Jakarta Post, Jakarta

The Quantum Group of Australia will invest up to US$250 million to develop 100,000 hectares of land in East Nusa Tenggara to grow cassava, as well as set up four ethanol processing plants, employing as much as 60,000 local farmers.

The memorandum of understanding between Quantum Petroleum, a subsidiary of Quantum Group, and Southwest Sumba administration was signed Wednesday.

Quantum chief executive officer Ralph Michael told The Jakarta Post the firm would start building the first plant in the fourth quarter of this year, while construction would commence on the other three by the middle of next year.

The firm will invest around $200 million for building the four plants and $50 million for the plantations.

Michael said the 100,000 hectares could produce at least 20 million tons of cassava, or five million tons of sweet potato.

From that yield, a processing plant could produce 100,000 metric tons of bioethanol per year.

"We will employ around 60,000 local farmers to work on the plantation and spend at least $5 million for their wages each month," Michael said.

"The Sumba administration is very supportive, and they are very happy because this project will create employment for the local community," he said.

In a bid to streamline business activities in the backwater province, Quantum suggested the local administration improve infrastructure.

"We have asked the local administration to develop necessary infrastructure such as expanding the airport runway," said Yoseph Wijaya, commercial director of PT Anugrah Kurnia Abadi, Quantum's Indonesian partner.

Anugrah has only a 5 percent share in the joint venture.

Sumba regent Emanuel B. Eha said the administration would fully support the business, and pledged to improve business infrastructure.

"We will support them by providing the facilities they may need," he said.

"This project will have a positive effect on the local economy," Emanuel said.

Aside from biofuel business, Quantum is also planning to plant vegetables and breed Australian cattle.

Indonesia is the second country after Bulgaria where Quantum has invested in bioenergy development projects.

Quantum is also interested to take over palm oil plantations and oil palm processing plants from other local companies.

Quantum originally planned to invest in the bioethanol project in Malaysia six months ago. However, the company decided to shift its operations to Indonesia because of unfavorable regulations set out by the Malaysian authorities. (rff)

Time for alternative basic foods: Minister

The Jakarta Post, Jakarta

Amid high prices in some of the country's key commodities such as soybeans and rice, Industry Minister Fahmi Idris said Wednesday it was time for Indonesians to consume alternative commodities such as corn, cassava and other types of beans on a daily basis.

Fahmi said he had asked the food industry to produce more foods from such alternative commodities.

"It is time to reintroduce these alternative foods nationwide. We should not rely on one type of food only, for example rice, as our basic food," Fahmi said during the opening of an exhibition on alternative foods and their supporting technologies.

He said corn and cassava could substitute for rice, while koro beans could substitute for soybeans to produce tempeh.

"But for now, the ingredients to produce tempeh are still mixed, some 40 percent is koro bean while the remainder is soybean," he added.

Instant and small-thin noodles that use wheat flour as their main ingredient, Fahmi said, could now also be substituted with corn essence.

"We've found new basic commodities," said Fahmi. "The next thing is how to produce foods of good quality to meet people's tastes. Consumer taste is the key to successfully promoting these new commodities."

A pioneer of corn-based noodles in Indonesia, PT Subafood Pangan Jaya, produces instant and thin-small noodles to give the public alternative basic foods.

Promotion supervisor Agus Sujarwo told The Jakarta Post at the exhibition that the company has manufactured noodles made from corn essence since 2004.

Currently, the company's daily production reaches 3 tons of noodles.

Agus said that although the company's production capacity was small compared to big players like Indofood, Subafood's products were distributed nationwide. (nkn)

President asks agriculture minister to diversify food

Jakarta (ANTARA News) - President Susilo Bambang Yudhoyono has urged Agriculture Minister Anton Apriyantono and governors to diversify food.

"The diversification is aimed at reducing Indonesia`s dependence on rice as a source of carbohydrate," the president said when awarding letters of appreciation for national food security to 156 people at the state palace here on Thursday.

Noodle has successfully replaced rice as a source of carbohydrate, he said, hoping that the food made of local maize, cassava, sago palm and others could be further developed in the future.

"Please make the new foodstuffs in a contest and provide the winners with a token of appreciation, medal, and prize prize providing the people like them very much," he said.

The president on the occasion also quoted data from the Central Bureau of Statistics (BPS) that the agriculture sector in 2007 had grown by 4 percent.

Even not giving the details, the head of state said that in Indonesia`s history, it was only on four occasions that agricultural growth has reached more than 3 percent.

In the meantime, Agriculture Minister Anto said that staple food in Indonesia is mainly rice, which prompted the government to constantly try to diversify food.

Agriculture ministry developing 15 commodities for rural agro-industry

Jakarta (ANTARA News) - The Ministry of Agriculture in 2007 has been developing rural agro-industry covering 15 different farm commodities.

Director General of Farm Produce Processing and Marketing at the Ministry of Agriculture Djoko Said Damardjati stated in Jakarta on Monday that the 15 farm commodities are wheat in seven regencies, cassava-based animal feed and meal in two regencies,and citrus fruits in five regencies.

Mango agro-industy is being developed in three regencies, chili in five regencies, palm sugar in three regencies, coconut in 15 regencies, palm oil in two regencies, patchouli oil in four regencies and coffee in 15 regencies.

The others are castor oil plants in three regencies, coconut-based biodiesel in seven regencies, gambier in two regencies, and jute in three regencies, while the fresh milk agro-industry in six regencies.

"Right now, technical directives on the development of local wheat are already available for distribution to the regions," katanya.

In the meantime, a feasibility study has also been conducted of palm sugar and coconut-based biodiesel, and a workshop on partnership between milk processing undertakings and livestock breeders.

Djoko also said that besides rutal agro-industries, this year the agriculture ministry will also develop a quality guarantee- based farm gate marketing system for mangosteen in four regencies, citrus fruit in eight regencies, vegetables in 17 regencies, flowers in four regencies, coconut in four regencies and cacao in 29 regencies.

In 2006, he added, a model development of national strategic commodities has also been developed on the basis of farmers groups in a production center, covering 12 different farm commodities, namely in 19 regencies, namely rice, glutinous rice, cassava, corn, mangosteen, flowers, cacao, castor oil plants, cows, milk, and the development of integrated marketing of horticultural produce.

Tapioca plant in Karimun one way of poverty eradication

Karimun, Riau Islands (ANTARA News) - A tapioca factory is believed to be a solution to the problems of the 7,715 poor families in Karimun District.

The statement was made by Parlindungan Lubis, a public leader in Tebing subdistrict on Friday, while adding that this is an easier and more practical way than continue hoping for the benefits of the Special Economic Zone (SEZ) which for almost one year now still remained a project.

Even if the SEZ has become a reality, there is no guarantee that the people of Karimun District would get its benefits, he said.

Therefore Lubis hoped the Karimun district administration should not hope too much from the central government`s promises and instead give more attention to improving the welfare of the people.

"Honestly speaking, how much has the money from the Karimun budget of 2006 and 2007 been spent on preparations for the building of SEZ infrastructure, while practically nothing of the project has been realized until now," he said.

With a view to improving the economy of the people, it is not so difficult to obtain cassava roots. The core of the problem is that the Karimun district administration has been doing nothing in increasing employment opportunities.

"Employment opportunities could be opened up if the Karimun district administration invited investors who may have direct contacts with the people by, among other things, building a tapioca producing plant," he said.

For example, a tapioca producing factory with a production capacity of 50,000 tons per month, may need at least 300,000 cassava seedlings which could be harvest after six months, he added.

Theoretically, he said, if each poor family under this scheme provides the basic material (cassava roots) of the tapioca plant, the program of poverty eradication may be successful, and other relevant industrial enterprises may also emerge and develop.

Even the discarded skin and waste material of cassava roots could be processed into fodder and feed for livestock and fish, Lubis said.

Besides, he added, there would no longer any unused land, as the people would no longer hesitate to sell their cassava roots in large scale.

Some 35-km of land on both sides of the Tanjung Batu road via Sawang to Belia strait, are still unproductive.

Biofuel to power Indonesia's anti-poverty drive

Jakarta (ANTARA News) - Indonesia is embarking on an ambitious biofuel programme which has already attracted more than 17 billion dollars in foreign and domestic investment and criticism from conservationists worried about the country's forests.

While Indonesia is rich in oil and gas supplies, demand in Southeast Asia's biggest economy is outpacing production and it is seeking alternative energy sources to secure its future.

The government has set a target that 17 percent of the country's energy requirements must be met from renewable sources by 2025 and last year established a National Team for Biofuel Development to develop alternative energy supplies.

For team chief executive Al Hilal Hamdi, crops such as palm oil, cassava, jatropha and sugar cane could hold the answer not only to Indonesia's concerns about energy security, but also unemployment, poverty, the environment and local unrest.

Last month foreign and domestic firms signed agreements totalling 12.4 billion dollars to develop biofuel projects to turn crops such as palm oil and sugar cane into biodiesel and bioethanol.

Chinese state-owned China National Offshore Oil Corp. inked the single biggest deal -- worth 5.5 billion dollars -- with PT SMART, a subsidiary of Indonesia's Sinar Mas Group, and Hong Kong Energy (Holdings) Ltd.

The other investors also included Malaysia's Genting Bhd., Japanese firms Mitsubishi and Mitsui, Brazil's Petrobras and companies from South Korea and

Singapore.

"Foreign investment is 12.4 billion US and the domestic investment is about five billion US -- half of that is for the farmers through the Indonesian banks," Hamdi told AFP in an interview.

Over the next eight years, some five million to six million hectares (12.5 million to 15 million acres) will be planted with biofuel crops, he said.

But just where all this land -- an area far larger than Denmark and a bit smaller than Sri Lanka or the US state of West Virginia -- is going to come from is what worries conservation groups concerned about deforestation.

And according to a surprising study by Netherlands-based Wetlands International and Delft Hydraulics, biofuel is often more polluting than fossil fuels.

Drainage of vast peatland areas for oil palm plantations leads to huge emissions of carbon dioxide as drained peat decomposes very rapidly, the study released in December found.

The decomposing peatland can release 70 to 100 tonnes of carbon dioxide per hectare per year and result in emissions 10 times higher than if coal was used instead of biofuel, the study found.

Often more polluting than fossil fuels

"Production of palm oil in Southeast Asian plantations degrades huge peatland areas. The large amounts of carbon dioxide being emitted due to this degradation makes the use of palm oil many times more polluting than burning oil or coal," Wetlands said.

Hamdi, who attended the UN conference on climate change in November, said:

"We in Indonesia have already taken some action to improve or to recover the

degradation of the peat land."

While energy security and safeguarding the environment are concerns, he said eradicating poverty and tackling massive unemployment were the main focus of the biofuel programme. About 40 million Indonesians live below the national poverty line of 1.55 dollars a day.

"Actually our concern for the biofuel development programme, number one is to reduce poverty, to create more jobs for the people," the former manpower minister said.

"We would like to cut our unemployment rate from 10.2 percent last year to

six percent in 2009-2010. About four million jobs need to be created for the

people," he said, but tens of millions more are underemployed.

While it sounds ambitious, Hamdi says his goal is achievable.

"Four million jobs is equivalent to five to six million hectares of oil palm, jatropa and cassava and the income for the people is above the minimum wage," he said.

At current crude palm oil prices, two hectares of oil palm would give the owner four million rupiah (about 440 dollars) a month while one hectare of sugar cane for bioethanol could yield an annual net income of 12 million to 14 million rupiah.

"It's a good income for the people in the villages where the minimum (monthly) wage is only 75 dollars," he said.

The introduction of new crop varieties and better cultivation methods with

the help of state enterprises would also increase the productivity of small farmers, which was often less than half that of commercial plantations.

"Malaysia has a good experience with that model. They can improve the yield," he said.

And while prices for oil and biofuel fluctuate, Hamdi said Indonesia was studying the flexible approach taken by Brazil, one of the world's leading producers of bioethanol.

"We are learning from Brazil. When the international price of bioethanol is above that of gasoline, they give the commodity for export and import more gasoline. It's an excellent model that we are going to copy in Indonesia," Hamdi said.

While expressing general approval of biofuel, environmental groups fear that Indonesia's massive expansion programme will come at the expense of its forests.

But Hamdi said there was already more than enough land available due to rogue companies that had obtained plantation licences but then just logged the timber.

Abandoned, logged land

Satellite data for Central and Eastern Kalimantan on Borneo island revealed about 4.5 million hectares of unproductive or degraded land which had been logged and abandoned, he said.

Hamdi said this land could be improved by growing biofuel crops and provide people with jobs in an area where there were few employment opportunities.

"To reduce poverty is our concern. Otherwise they participate in illegal logging because there is no alternative for the people there," he said.

"We cannot open industry, electronics or textiles in that area. It's difficult with the lack of skills (and) education, so agriculture is more familiar to them because they've been doing it for more than a century," he said.

Tackling unemployment in poor and sometimes restive areas could also have a peace dividend.

"The social conflict mainly comes from the people who don't have access to (opportunities) to improve their lives and then some provocateurs come," he said.

"If they have a job and they're busy with their plantation, they don't have time to bother or disturb their neighbour. It's more peaceful."

Local biofuel power schemes combined with solar or wind energy could also enable thousands of villages and islands which are inaccessible to power transmission lines to become energy self-sufficient. About a third of Indonesians have no access to electricity.

"They have had good results in the southern Philippines empowering the community, reducing the government subsidies for the electricity and we'd like to have this programme work with us in Indonesia," said Hamdi.

While Indonesia has targets for renewable energy, Hamdi stresses that is

not the main concern, explaining that 10 percent of the country's energy needs

could be met at present just by substituting biodiesel and reducing palm oil

exports.

"It's not just a matter of energy, but also poverty alleviation, creating more jobs, increasing purchasing power, improving the environment by utilising unproductive land, by utilising more green energy and of course to secure renewable energy for our Indonesian future," he said.

Massive biofuel program to go ahead despite int'l concerns

Ika Krismantari, The Jakarta Post, Jakarta

International criticism of Indonesia's massive biofuel development program will not affect the project, which is expected to turn the country into one of the biggest biofuel producers in the world, says an official.

The director of the Energy and Mineral Resources Ministry's research and development unit, Nenny Sri Utami, said in Jakarta on Monday that the plan to turn more than five million hectares over to growing the feedstock for the biofuel plants would go ahead as planned.

Nenny, who is also a member of the government biofuel development committee, said that allegations being made by some international non-governmental organizations to the effect that the program would endanger the environment were groundless.

A 2006 presidential decree on the development of the biofuel sector states that only idle or critical land can be used for the development of biofuel-feedstock plantations. Feedstock is produced by, among other plants, oil palms, sugarcane and jatropha.

As part of the project, the government has allocated 5.25 million hectares of idle land for the growing of the basic feedstock for bioethanol and biodiesel production.

About 1.5 million hectares will be allocated for oil palms, 1.5 million hectares for jatropha, 0.75 million hectares for sugarcane and about 1.5 million hectares for cassava.

Under the program, Indonesia is expected to be able to produce the basic components for biofuel production, including fatty acid methyl esters (FAME) and about 3.95 million tons of ethynol a year by 2010. At this production level, Indonesia would be one of the world's biggest biofuel producers.

To date, the Forestry Ministry has set aside a total of 5.06 million hectares in 13 provinces to be used for such plantations.

"Looking at the list, we can see that none of these areas are located in protected forests," Deka Mardiko of the Forestry Ministry told The Jakarta Post on Monday.

"We are working together with the National Land Agency, Agriculture Ministry and Home Ministry to check whether the areas are located in forests or not," Deka said. "If anyone is caught clearing land in a protected area, even if he wants to grow biofuel feedstock, he will be charged with illegal logging."

The Forestry Ministry's director of renewable energy, Ratna Ariati, said she understood the concerns of the international NGO's over the biofuel program.

"They are not only afraid of the environmental consequences arising from land clearance for biofuel-feedstock plantations, but also that production will disrupt food supplies as many of the plants that provide biofuel feedstock are also edible," Ratna said.

The International Herald Tribune says that scientists around the world are taking a second look at what biofuel really has to offer, with many questioning the environmental feasibility of the current system used for developing green energy.

In an article published last January, the Herald Tribune said that rising demand for palm oil in Europe had brought about the razing of huge tracts of Southeast Asian rain forest and the overuse of chemical fertilizer there. Not only that, the space for the expanding palm plantations was often created by draining and burning peatland, which sent huge amounts of carbon emissions into the atmosphere.

One NGO that is concerned with environmental issues, Friends of the Earth, estimates that 87 percent of the deforestation in Malaysia between 1985 and 2000 was caused by new oil-palm plantations, while in Indonesia, the amount of land devoted to oil palm has increased by 118 percent in the past eight years.

One study says that the draining of the peatland used for biofuel plantations in Indonesia releases 600 million tons of carbon into the atmosphere a year and that fires contribute an additional 1,400 million tons annually. According to the researchers, the total, 2000 million tons, is equivalent to 8 percent of all global emissions caused annually by burning fossil fuels.

In response, Ratna said that the government would strictly abide by the basic principles of environmental protection.

"We are doing it for the sake of the environment. It would be nonsense if we were to destroy the forests in the process," Ratna said.

Lampung on target to become major biofuel center

Oyos Saroso H.N., The Jakarta Post, Bandarlampung

Lampung is set to become a major national production center for biofuels during the next four years, an official says.

Four local companies are spending more than Rp 860 billion (US$90.52 million) on bioenergy projects in the province, while a South Korean firm plans to invest more than Rp 90 trillion to build a bioethanol refinery.

A project worth Rp 184 billion and managed by PT Acidatama Lampung Chemical Industry in Central Lampung was approved by the provincial administration in 2005.

In 2006, PT Bio Energi Ind. invested $900,000 to build a plant in Tulangbawang regency. That year, three other local firms -- PT Sumi Asih in Bandarlampung, PT Medco Ethanol in Lampung and PT Luhur Prakarsa Maju Dinamika in North Lampung -- began investing a total of Rp 675.6 billion.

Meanwhile, South Korean's PT CSM Corporation has signed a memorandum of understanding with the Lampung administration to invest Rp 90 trillion in the province to build an ethanol refinery in North Lampung.

CSM has already planted a 20,000-hectare plot of land with cassava -- 10,000 ha in Way Kanan, 5,000 ha in Tulangbawang and another 5,000 ha in North Lampung.

The head of the Lampung Investment, Culture and Tourism Promotion Office, Syaifullah Sesunan, said the interest shown by investors indicated the province's potential and that foreign investors' trust had improved.

"We intend to become the center for biofuel in Indonesia. Large companies in Lampung such as PT Sugar Group, which has been producing refined sugar, and the PT Perkebunan Nasional VII state plantation company have built biodiesel and bioethanol plants, along with foreign investors," Syaifullah said on Monday.

Lampung Research and Development Agency head Rellyani was optimistic that biofuel production in Lampung could easily meet 10 percent of the province's energy demands as stipulated in a presidential decree on fuel supply.

"Lampung is estimated (currently) consume around 43,000 kiloliters of bioethanol annually, while (biofuel) production capacity could reach 740,733 k/lt a year," Rellyani said.

"We're confident Lampung could become a bioethanol producing center and supply fuel to the western part of the country, particularly Sumatra and Java," she said.

Rellyani estimated local demand for biodiesel at 97,597 k/lt a year, "while production of biodiesel is projected at around 128,000 k/lt annually. This shows a surplus in biodiesel production", she said.

She said Lampung was more suited to producing bioethanol than biodiesel.

"There is a huge amount of cassava and sugarcane here, and the soil conditions are also suitable to grow these crops."

"Biodiesel is made from palm oil and the jatropha plant. Most farmers prefer to turn palm oil into crude palm oil than biodiesel, while supplies of jatropha are still limited at the moment."

Lampung has a plantation area covering 543,800 hectares, producing 367,840 tons of palm oil a year, 5,386,062 tons of cassava per ha annually and 7,101,600 tons of sugarcane yielding 340,876 tons of molasses annually.

The government wants biofuels to make up 10 percent of total energy production by 2010, however, current production levels are well below this amount.

Total levels will increase, however, with the work of PT Medco Ethanol Lampung (MEL), which has been operating in North Lampung since October, and is targeting production of 60,000 k/lt of bioethanol annually.

The country's first bioethanol plant is currently in the design and construction planning stage. Workers are building access roads to the factory site and securing partnerships with cassava and sugarcane suppliers.

PT MEL project director Panya Siregar said the company planned to invest around $4.12 million in the plant through a project funding scheme. The plant is expected to employ 150 workers and be backed by a supply of around 13,000 ha of cassava plantations, providing around 600,000 working days for farmers annually.

"The factory's presence will have positive impacts on supporting sectors, such as transportation, and create a new distribution network for cassava and sugarcane farmers," Panya said.

The company will also use modern technology to benefit from biogas produced from by-products, he said.

"The factory is designed to produce 180 k/lt of bioethanol daily or an equivalent of 60,000 kiloliters annually. In its initial stage, the company is planning to produce high quality ethanol for industry, especially for overseas markets, such as Singapore and Japan," Panya said.