Indonesia's Medco eyes cassava in new ethanol plant

Indonesia's largest listed energy firm PT Medco Energi Internasional Tbk will start a 180,000 litres per day ethanol plant later this year, using cassava as a feedstock, a senior official said on Wednesday.

Bio-ethanol production from the plant in Lampung in southern Sumatra will be exported to Japan and the European Union, said President Director Djatnika Puradinata from PT Medco Methanol Bunyu, a unit of Medco Energi (MEDC.JK: Quote, Profile, Research).

"We will run at full capacity once the plant becomes operational. It will be the biggest ethanol facility in Indonesia and we are now negotiating with potential buyers for the product," Djatnika told Reuters on the sidelines of an energy forum in Singapore.

Besides this $45 million plant, there are currently four to five ethanol facilities in Indonesia, each with capacity of 120,000 litres per day or lower, he said.

"We plan to build another five biofuel plants within four years from now and we are studying the feedstock," Djatnika added.

Medco preferred cassava to sugarcane although the latter offers the highest yield, as Indonesia already relies heavily on sugar imports.

"We will use cassava in the new plant and it's important for the plant to be near the feedstock. Time is limited for processing. The starch content in cassava will change beyond 24 hours," he said.

Indonesia has nine refineries with 1.057 million barrels per day capacity but is forced to import fuels to feed growing transport and power sector demand.

"Biofuel is seen as a substitute product and it will strengthen the country's energy security. We have plenty of arable land, also good for palm oil. There is no need for deforestation," Djatnika said.