By Divya Chowdhury

DAVOS (Reuters) – Indonesia’s minister for economic affairs Airlangga Hartarto said Monday that the country has no plans of lowering the palm oil content in biodiesel to below 30% to maintain its energy supply.

We reduce our dependence on oil by using palm oil. When we look at the palm oil price and energy price, it is clear that you must (subsidise more) to petroleum. Hartarto explained that the problem will come down to energy security in an interview.

He said, “The) blending percent will not be decreased as energy security top priority,” while speaking at the World Economic Forum held in Davos.

Hartarto claimed that Indonesia (which supplies 60% of all the world’s oil palm) had instituted a 30% biofuel level to lessen its dependency on.

Hartarto stated that if you depend on oil you’re in a disaster scenario today with oil prices approaching $110 per barrel. He also said that Indonesia had increased its budget for oil to $100, from $60.

To reduce rising cooking oil prices, Indonesia stopped the export of palm oil crude and derivatives in April. This ban rattled the global edible oil market at a moment when supply was tightened by the war in Ukraine.

The people of Indonesia do not know the energy price. Hartarto stated that government must pay delta (“difference”) between the energy price, affordable price, and it.

The Indonesian Trade Ministry issued Monday rules that required companies to obtain export permits. These would only be granted to applicants who are able to satisfy a domestic market obligation (DMO). While the regulation didn’t specify exactly what DMO meant, permits will be valid for six month.

DMO policies, in which producers are obliged to sell certain percentages of their products localy at a specified price, were used before the latest ban to help ensure local supply. But it did not control prices for cooking oils.

Hartarto replied that 20% of palm oil would have to be domestically sold under the DMO.

He said that while the DMO is currently at 30% (at the moment), it could fall to 20% as oil prices drop.

Hartarto indicated that Indonesia’s growth prospects were strong at 5% in the past quarters and comparable with Vietnam’s.

He said, “We are still optimistic that growth could be as high as 5%. However, this is subject to energy prices.”