Economic analysis on the potential of palm oil empty fruit bunch pellets as alternative fuel to reduce the cost of the government’s 3 kg LPG subsidy and its role in achieving sustainable development goals

Abstract

Government subsidies related to 3 kg LPG per year are significant in the last three years if averaged up to IDR 50 trillion per year. Even though the number of users continue to increase, unfortunately, there are still many shortages of 3 kg LPG in areas outside Java; even in Java, there is still a scarcity. The Minister of Energy and Mineral Resources has issued Ministerial Decree No. 128 K / 70 / MEM / 2020 concerning the Task Force on Energy Security and Energy Utilization. In the second statement point, d stipulates the LPG Import Reduction Working Group. The purpose of this study is to calculate the economic value of the empty fruit bunch (EFB) pellet business as a recommendation to the government and the private sector. The method used is the calculation of NPV, MIRR, PBP, and ROI. In addition, ethical business and distribution models are used to deliver products to the end-user (customer) and guaranteed availability. Therefore, a breakthrough is needed to process empty fruit bunches (EFB) into industrial-scale solid fuel (pellets) that can replace 3 kg LPG, especially for poor people.