The US$25m factory would have capacity to produce 60,000-100,000 tonnes of biodiesel a year.
And Benny Tjoeng, the head of the agro-industry division of the Indonesian Palm Oil Producers Association, has said that environmentally-friendly biofuels were the future.
He said several palm oil firms had already been producing 25 tonnes of biodiesel a month to run machinery and vehicles and was confident that mass production would happen in the near future, triggered by crude oil prices.
It is predicted that Indonesia will produce 14.7 million tonnes of palm oil in 2006, up from 13.6 million tonnes in 2005. Currently the biofuel mix is around 5% palm oil and 95% diesel, but Mr Tjoeng believes the proportion of palm oil could rise to 20%.
