Jakarta. The government is preparing a financing scheme for the mandatory bioethanol program.

According to Energy Minister Bahlil Lahadalia, the scheme aims to resolve the price gap between bioethanol-blended gasoline and those without.

"We will create a sound formula that benefits the industry players, farmers, and the state," Bahlil was quoted as saying by the state news agency Antara on Monday.

Bioethanol can use three raw materials: corn, cassava, and sugar cane.

These commodities will be subject to a government-set price to ensure farmers have a good income. 

The government must also cover the differences when global oil is cheaper than bioethanol. Bahlil signaled that the program might replicate how the palm oil plantation fund BPDPKS covers the differences between the biodiesel and diesel fuel.

"The treatment may be like BPDPKS. But we are still working on the formula," Bahlil said.

Indonesia aims to roll out the mandatory 10% ethanol blend or E10 starting in 2027 before switching to E20. Southeast Asia's biggest economy plans to raise the ethanol mixture to 20% gradually between 2028 and 2029.

Sorghum-infused bioethanol will likely be more competitive compared to those with sugar or corn from a price standpoint, according to University of Indonesia energy expert Ali Ahmudi Achyak. This is because sorghums are not used as much as the other commodities in the food sector.

Ali, however, cautioned that the sorghum bioethanol would still be more costly than fossil fuel. This calls for the need for incentives, including subsidies for seeds and fertilizers.

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