| Summary Analysis of Paper Presented by Mr. Arif P. Rachmat at POC 2017 |
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| by Nor Iskahar Nordin
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This report summarized Mr. Arif P. Rahmat’s paper titled “Indonesian Government Policies and Climate Impact to CPO Supply and Demandâ€.
Mr. Arif said that the establishment of CPO Fund to subsidize the biodiesel mandate has helped to increase CPO price. Revenues are determined by fixed export levies (US$50 [RM223] on CPO and US$30 on olein). The fund’s ability to decide how much biodiesel is used depends on the subsidy it must pay per MT to induce PT Pertamina to use biodiesel.
The levies collection for the CPO Fund of Indonesia is an industry-to-industry affair and seemed to be working well thus far. Producers do not object to the levy. By implementing B20 mandate, it takes CPO out of the market raised world prices by more than the levy. The higher the CPO premium versus Brent, the smaller the mandate; but as CPO prices fall, the mandate grows. This scheme works like an automatic price stabilisation fund.
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