Indonesia's PT Perkebunan Nusantara X and Japan's New Energy and Industrial Technology Development Organization, or Nedo, plans to begin construction of a fuel-grade ethanol plant in Mojokerto, East Java, in May, the state-owned plantation company said to local media over the weekend.

According to PTPN X President Director Subiyono, construction works at the 30 million liters/year ethanol plant is expected to be completed by early 2012 and commercial operations are to begin at the end of 2012, the Jakarta Post reported on Sunday. The estimated investment cost of the ethanol plant is $25.5 million, $9.5 million of which would be provided by PTPN X and the remainder from Nedo, in the form of a grant. Feedstock will be provided by the Gempolkrep mill in Mojokerto.

Both companies plan to utilize around 100,000 mt of the total ethanol output and sell the rest, domestically and for export. "If the government's program of renewable energy works, we will sell it to Pertamina," said Subiyono, adding that negotiations with the state oil and gas company were ongoing.

"We want to give added value to molasses, which so far we have not used," said Subiyono. He added that the current price of molasses was Rupiah 1,100/kg ($0.128/kg) compared to the price of fuel-grade bioethanol that could go up to $1,000/mt.

source: platts

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