Jakarta. Indonesia plans to mandate a 20% ethanol blend in gasoline, known as E20, by 2028 as part of efforts to curb the country’s heavy reliance on fuel imports, Energy and Mineral Resources Minister Bahlil Lahadalia said on Friday.

Speaking at the Indonesia Economic Outlook 2026 forum in Jakarta, Bahlil said Indonesia faces a persistent gap between domestic gasoline production and consumption, forcing the country to rely heavily on imports despite being a major energy producer.

“If we are not creative in pushing ethanol blending, we will never be able to fully meet our needs domestically,” Bahlil said, according to state news agency Antara.

Government data show Indonesia’s gasoline demand reached 37.3 million kiloliters (kL) in 2025, while domestic production stood at just 14.27 million kL. As a result, the country imported about 23 million kL of gasoline last year. Demand is expected to rise further to around 40 million kL in the coming years, while refinery capacity remains largely unchanged at roughly 14 million kL.

By introducing E20, the government hopes to replace a portion of imported gasoline with domestically produced bioethanol, primarily derived from sugarcane. Bahlil said the broader strategy is to eventually limit imports to crude oil only, while increasing domestic value-added processing.

To support the 2028 target, the government is finalizing a national bioethanol roadmap and preparing incentives for companies willing to invest in ethanol production facilities. Details of the incentives were not disclosed.

Signs of growing industry interest are already emerging. Japanese automaker Toyota has begun exploring investments to adapt vehicle technologies to Indonesia’s ethanol-blended fuels, starting with E10, according to officials.

On the production side, state energy firm Pertamina and sugar plantation company SGN earlier this month broke ground on a sugarcane-based bioethanol plant in Banyuwangi, East Java. The facility is expected to have an annual capacity of 30,000 kL.

The ethanol plan builds on Indonesia’s broader biofuel strategy. The country currently enforces a B40 mandate, requiring a 40% palm oil blend in biodiesel, and Energy Minister Bahlil Lahadalia has said the government may raise the blend to B50 in the second half of this year, pending the outcome of ongoing trials.

Indonesia is targeting biodiesel output of 15.6 billion liters in 2026, a move expected to reduce fossil diesel imports by about Rp 139 trillion.Investment momentum is also picking up. Indonesia’s sovereign wealth fund Danantara last week launched the first phase of its downstream industrial drive, breaking ground on six projects worth a combined $7 billion. One of the projects is a sugarcane-based bioethanol plant in Glenmore, Banyuwangi, East Java, jointly developed by state energy firm Pertamina and plantation group Perkebunan Nusantara, aimed at supporting biofuel production and reducing dependence on imported fossil fuels.