Biodiesel allocation decree was waited for by industry

Indonesia had planned to introduce greater biodiesel mix on Jan. 1

Palm oil standard contract rose 1% after previous fall

Government goes for 50% biodiesel mix in 2026

(Recasts with energy minister's remark)

By Bernadette Christina and Fransiska Nangoy

JAKARTA, Jan 3 (Reuters) - Indonesia Energy and Mineral Resources Minister signed a decree on Friday allocating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while giving the industry until the end of next month to adjust to the higher level of the fuel in the mix.

Indonesia, the world's biggest exporter of palm oil, had actually prepared to release the obligatory requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

"The ministerial guideline has actually been signed," the minister Bahlil Lahadalia told press reporters, including the federal government was working to increase the necessary biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, stated biodiesel manufacturers and fuel sellers will be given until Feb. 28 to adapt to the B40 mix. She said the hold-up was due to the fact that of technical difficulties linked to aids for the fuel.

The non-implementation on Jan. 1. had resulted in a 2.6% drop in the Malaysian palm oil criteria agreement on Thursday. On Friday, it recuperated by around 1%.

Fuel sellers and biodiesel producers had actually stated they were unable to prepare agreements for biodiesel distribution without the decree.

The biodiesel allowance for 2025 suggested an increase from 2024's approximated biodiesel usage of 12.98 KL, ministry information revealed on Friday.

Of the total allocation for this year, 7.55 million KL is for the public service obligation (PSO), which covers sectors such as mass transit, whose sales will be subsidised by the nation's palm oil fund.

"The remaining allotments will be offered at market cost. The non-PSO allotment is set at 8.07 million KL," Bahlil said, adding the fund might not subsidise the rate space between the palm oil and nonrenewable fuel sources for the overall allocation.

BPDPKS, the agency in charge of collecting and handling the palm oil funds, approximated in November B40 would need a 68% subsidy increase.

To help finance that, Indonesia plans to increase its export levy for unrefined palm oil (CPO) to 10% from the present 7.5%, however for that to happen, another main policy is required. (Reporting by Bernadette Christina Munthe, Nangoy, Dewi Kurniawati