The Indonesian Oil Palm Plantation Estate Fund (BPDKS) carries out its duties in accordance with the mandate of Presidential Regulation no. 61 Year 2015 on the Collection and Use of Oil Palm Plantation Funds. One of the allocations use of the fund is to financing the biodiesel type of biofuels.On 25 May 2018, BPDKS signed a biodiesel incentive financing agreement for the period May to October 2018. The agreement was signed by BPDPKS President Director Dono Boestami with 19 biofuel business entities (BBN). There are 19 business entities currently under contract with BPDPKS for biodiesel distribution from May to October 2018 with a total volume of 1.46 million kilo liters. The volume is determined based on the national solar demand. The sectors liable to get funding include the sector of Specific Fuel Type (JBT)/PSO and PLN power plants.For 2018, biodiesel financing is budgeted at Rp9.8 trillion with targeted biodiesel volume of 3.20 million kiloliters. The implementation of biodiesel incentive disbursement from 2018 to April 2018 amounted to Rp3.24 trillion with volume of 0.97 million kilo liters (30.31%).With the signing in effect, the availability of biodiesel supply in the country is guaranteed. Vehicles will provided with sufficient supply of biodiesel, as well as the mining industry whose heavy equipments are running with biodiesel fuel. Even the supply of electricity from PLN is guaranteed since a number of power plants have use biodiesel.This is not the only positive impact of this financing. Furthermore, the financing of these biodiesel incentives provides a positive chain effect for the country. Since August 2015 to April 2018, 5.88 million kiloliters of biodiesel has been produced and BPDPKS has disbursed Rp24.71 trillion in funds.By spending this fund, the state budget enjoys a certain saving for fuel post since it reduce the volume of diesel type of fuels import, with value reach Rp30 trillion. And with this saving, the state budget allocated for fuels import can now be diverted for other purposes, such as education or public health insurance.Not only that, the many uses of biodiesel will positively impact the environment as well. In the period of August 2015-April 2018, the reduction of Greenhouse Gas (GHG) emissions reach 8.79 million tons of CO2e. In addition, in terms of taxes, the country also enjoy the advantage because of its direct absorption to the state taxes from this incentive could reach the amount of Rp2,25 trillion.Not a Permanent Financing ModelAs an incentive instrument, the disbursement of BPDPKS funds will be executed permanently. Because this incentive is only channeled to cover the difference in the cost of biodiesel production with the price of diesel which may currently be the burden to the growth of biodiesel supply, since the price of biodiesel in the market is still much more expensive than the diesel fuel price index.Here is the illustration. Without the ability to cover the price gap, the interest to produce biodiesel will be hindered, while the need to start producing sufficient biodiesel to support energy supply conversion is high.This is why the needs to create provision of incentive for commercial sector who produces biodiesel materialized. BPDKS formed to collect and channel out the incentives fund. The incentive fund itself is not a subsidy since it is not derived from the state budget. The funds used are coming from the palm fund collected from the palm oil companies that export palm oil commodities.Next question would be, should biodiesel be produced? It certainly should. The resource inventory from fossil-based fuels has drop tremendously and obviously will be exhausted at any time. This is the reason why the government proclaimed the mandatory program of B20, which regulate the use of biodiesel with 20% vegetable oil content, and starting in 2020 targeting to reach 30% of vegetable oil content or B30. Domestic biodiesel supply has been sufficient for both B20 and B30 mandatory origran as it is supported by 25 biofuel business entities currently in active production with installed capacity of 12.06 million kiloliters. ***