KONTAN.CO.ID - JAKARTA. Indonesia state energy company PT Pertamina asked parliament to cap prices for some crude palm oil (CPO), as the company develops refineries to make fuel from the vegetable oil.

Pertamina needs a guarantee on the supply and price of palm oil as feed stock for at least three refineries it is investing in, chief executive officer Nicke Widyawati told a parliamentary committee on Tuesday.

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President Joko Widodo wants Indonesia to use fuel made from palm oil as he seeks to cut imports of costly fuel, a big contributor to Indonesia's persistent current account deficits.

Widyawati told parliament Pertamina wanted so called "domestic market obligation" (DMO) rules to require a mandatory portion of planters' output of CPO to be sold domestically at a capped price. Pertamina has also written to the government about its request.

Pertamina is converting its refineries to be able to process palm oil into fuel as well as adding a new unit to meet government targets. One of the facilities will cost $600 million to develop.

"When it is a national programme, there should be a measure to guarantee price and volume," Widyawati said.

Prices of palm surged last year when Indonesia, the world's top exporter of the vegetable oil, said it would expand the mandatory biodiesel programme.

Indonesia started using biodiesel with 30% bio-content made from palm in late 2019, up from 20% previously.

Editor: Yudho Winarto