Diversification of sugar and palm oil industries : Indonesia -- part 1. survey of energy and product investment options

Despite its state ownership, Perkebunan"s objective in this regard is to enter into joint ventures with foreign private investors in new enterprises based on Perkebunan agricultural estate resources and processing facilities. The main focus of this study is biomass energy development based on processing wastes from the sugar and palm oil industries. While a variety of new agro-industrial and biomass-based product options are technically possible, any new activity by Perkebunan will require new process energy and electric power. Energy production by the sugar industry is a proven and profitable commercial strategy in the United States and a number of countries, and broad-based energy research suggests energy development as a potential strategy in the oil palm industry as well. At the same time, rapid economic growth in Indonesia is creating enormous pressure on the power sector. In order to avoid shortfalls in electricity, the Government of Indonesia is seeking to implement a policy of private sector development of new power facilities. Similar to Perkebunan"s strategy to engage foreign private investment in its diversification, the purpose of this policy is to stimulate accelerated development of needed sources of energy and to lessen the accumulation of public debt by state bodies by engaging private investment in the energy sector. This strategy is strongly endorsed by USAID. The study was conducted by a team of specialists fielded by Winrock International and Perkebunan in September-October, 1990. The team sought to identify opportunities for waste-to-energy projects within the sugar and palm oil industries. Such projects would use processing wastes -- bagasse from the sugar industry, fruit bunches and other wastes from the palm oil industry -- to generate steam and/or electricity for use by these industries and by associated by-product industries which may be based on sugar cane and palm oil. Improved energy production would displace the use of fuel oil and the purchase of electricity, increasing Perkebunan"s profits and energy reliability, and providing incentives for additional value-added product diversification. Energy production in these industries may also permit the sale of electricity outside the sugar or palm oil complex, e.g., to adjacent communities, light industries, or the electrical grid network, thus providing a new source of revenue to the rural sector. (Author abstract)