Pure CPO can be used for power plants: analyst

Jakarta (ANTARA News) - Diesel power plants (PLTDs) of the national power utility company PLN could use pure crude palm oil (CPO) without mixture for fuel, the Executive Director of the Institute for Essential Services Reform (IESR) Fabby Tumiwa has said.

Technically, CPO does not necessarily be mixed with diesel oil, but it needs special treatment before being used that it will have the characteristics of automotive diesel oil (AD), Fabby said.

"CPO needs preheating up to a certain temperature. Therefore, basically, it is possible to use pure CPO to fuel PLTDs," he said here on Monday.

The government has ruled the use of CPO but at a 20 percent ratio in a mixture with ADO known as B20 for transport and industrial fuel. The policy is to save oil fuel and increase demand for CPO, which has been low in market demand.

The problem is the CPO price being very unstable.

"When the price of CPO in the world market is around US$500 per ton as it is now, it is very feasible to use CPO, but if the price rose to US$800, it is very much no longer feasible as CPO would be more expensive than ADO," he said.

It would be most likely when the CPO price is high, the producers would refuse to supply CPO at a price below the export price, he said.

"PLN needs a stable price and continuity of supply," he added.

A lawmaker from the Commission VII Ramson Siagian expressed support for the idea of using pure CPO to fuel power plants of PLN, saying "it would significantly save foreign exchange for the import of ADO.

At the same time, CPO would have wider market in the country that the result could be an increase in CPO price on higher demand, Ramson said.

However, he said, it would need to make sure that the use of CPO would not reduce the life time of the PLTD machines.

"It might be feasible in theory to use CPO for PLTD fuel but it would need empirical experience, whether the use of CPO would not damage the PLTD machines," he said.

Researcher from the Center for Study and Application of Technology (BPPT) Agus Kismanto said not all PLTDs such as low revolution (rpm 750) PLTDs of PLN could use CPO for fuel.

Agus said, currently, PLTDs use residue/marine fuel oil, adding that in order to be compatible with CPO, PLN needs to consult first with the factory producing the PLTD machines.

He said currently there is PLTD machines with the brand of MAN from Germany and Wartsila from Finland , which have special machine of PLTD using CPO for fuel. He suggested that all PLTDs using ADO should be shut to be replaced with ones using CPO for fuel.

"Indonesia needs only to buy the license and we could produce PLTD machines in the country . This is very feasible business as we have thousands of PLT units," he said.

Agus Kismanto suggested that the fund managed by the BPDP-KS (the Body managing the oil palm plantation fund) be used to finance the PLN program for the PLTD fuel conversion, to ensure certainty for the state electricity company in CPO supply at a stable price.

Fabby Tumiwa has another suggestion to create a win win solution between PLN and CPO producers that is to adopt cost plus margin or cost plus adjustment scheme in case of change in CPO price in the world market.

"I think it is fairer for both sides," he said.

He said PLN needs up to 6 million kiloliters of ADO per year, therefore, if ADO could be replaced with CPO it would save much foreign exchange.

Earlier, Energy and Mineral Resources Minister Ignasius Jonan said he had told PLN as the authority in electricity in Indonesia, to replace ADO with CPO.

"We have instructed PLN to change the fuel of PLTDs with a total capacity of at least 1,800 megawatts with pure CPO," Jonan said when opening an Indonesia- Finland business forum here recently.

Minister of State Enterprises (BUMN) Rini Soemarno also encourages PLN to stop using ADO to fuel its power plants.

Currently there have been technology to use pure CPO to fuel PLTDs, therefore, PLN should use only CPO, she said here last week.

The use of CPO which is available in abundance in the country would reduce dependence of PLN on imports for oil fuel (BBM), Rini said, adding the conversion could save as much as US$1 billion in imports of ADO.

Source: ANTARA News

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