Biofuel price increases being introduced by the Argentine government could aid the recovery of the biodiesel sector in the country, UkrAgroConsult reports.

An energy department resolution on 2 January increased biodiesel prices by 59.3% to 77,300 pesos (US$900)/tonne for January, with monthly price rises to 92,558 pesos (US$1,078)/tonne in May.

Gabriel Matarazzo, secretary general of petroleum, gas and biofuels union federation FASiPeGyBio, told BNamericas that most biodiesel plants in the provinces of Buenos Aires and Santa Fe were closed or operating at a minimal level.

The government resolution was “a light at the end of the tunnel”, he said.

UkrAgroConsult wrote that the government had already increased biodiesel prices to 48,533 pesos (US$575)/tonne in October but the move had failed to cover operating costs.

Matarazzo said companies would only be able to start running normally from February and estimated a fully operational sector by April or May.

As a result, the 10% biodiesel blending mandate would be reduced to 5% in January, 6.7% in February and 8.4% in March.

The sector was still concerned that the falling value of the peso and the rising prices of soyabean, which were paid in US dollars, could neutralise the resolution’s effects, UkrAgroConsult wrote.

According to a central bank survey, the peso would lose 41.3% of its value against the US dollar to reach 126.50 by the end of 2021.