Plantation sector: Government of Indonesia is seriously implementing regulations and actions to improve domestic consumption of palm oil. State owned oil company, Pertamina will develop three refineries for bio-diesel processing while state owned electricity company, PLN and Ministry of Energy and Mineral Resources ( ESDM ) are developing pilot project of 100% palm-oil-fueled power generation which expected to complete this year. Minister of Energy and Mineral Resource, Ignasius Jonan expects diesel power generations with capacity of 2GW to use palm oil fuel within the next two years.
Indonesia bio-diesel consumption is expected to increase 53% yoy to 3.92mn kiloliters in 2018, before further increasing to approximately 6.2mn kiloliters (+58% yoy) in 2019. To ensure bio-diesel supply next year, the government had selected 19 FAME producers to supply the total of 6.2mn kiloliters of bio-diesel. Additionally, to minimize distribution delay from FAME production plants to Pertamina's blending facilities, FAME delivery points will be reduced from 68 terminals currently, to only 25 terminals next year while Pertamina will handle bio-diesel distributions from these 25 terminals to all regions in Indonesia.
ndonesia Palm Oil Association (Gapki) estimates Indonesia palm oil inventory to decrease to 3.5-3.6mn tons in year-end 2018 from approximately 4.35mn tons in Oct'18 on the back of higher export volumes backed by lower palm oil export duty imposed by the government in Dec'18. (Kontan, Investor Daily)
Comment: This is positive for palm oil sector, in our view. At this stage, we maintain our Buy rating for
Sumber : IPS RESEARCH
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