Executive Viability Abstract
This feasibility study evaluates the establishment of a large-scale sustainable palm oil biofuel refinery in Indonesia, focusing on HVO (Hydrotreated Vegetable Oil) and SAF (Sustainable Aviation Fuel) production. Given Indonesia's B35/B40 mandates and the global shift toward decarbonization, the project leverages ISPO-certified feedstock to secure both domestic market share and high-value export premiums. The study indicates strong financial viability driven by government subsidies and increasing international carbon prices.
Return on Investment
22.4%
Payback Span
5.2 years
Net Present Value
$168,400,000
IRR Index
20.2%
## Market Analysis
Indonesia accounts for approximately 60% of global palm oil production. The domestic market is underpinned by the mandatory B35 biodiesel blending program, with projections to move toward B40 and B50. Internationally, the demand for ISPO (Indonesian Sustainable Palm Oil) certified biofuels is surging in the EU and North America due to ReFuelEU Aviation and Clean Fuel Standard mandates. Competitive positioning relies on 'Sustainability Traceability' to avoid anti-dumping duties.
## Capex Summary
Total estimated CAPEX is $385 Million USD. This includes $210M for high-pressure hydro-processing units, $85M for feedstock pretreatment facilities, $45M for storage and logistics infrastructure, and $45M for EPC (Engineering, Procurement, and Construction) and contingency.
## Revenue Model
Revenue is generated through a tri-stream model: 1. Domestic sales to Pertamina at the regulated HIP (Harga Indeks Pasar) price; 2. Export of HVO/SAF to international buyers at a premium over FAME; 3. Sale of refined glycerin and technical grade fatty acids as chemical byproducts.
## Financial Projections
Annual revenue is projected at $1.2 Billion USD at full capacity. OPEX is dominated by feedstock costs (CPO), accounting for 80% of expenses. The project maintains a healthy EBITDA margin of 15-18% under current price scenarios.
## Risk Assessment
Key risks include CPO price volatility, regulatory shifts in EU palm oil imports (RED III), and technological scaling issues. Mitigation strategies involve long-term supply contracts with ISPO-certified plantations and flexible refinery configurations to process alternative feedstocks like UCO (Used Cooking Oil).