Biodiesel allowance decree was awaited by industry

Indonesia had planned to introduce higher on Jan. 1

Palm oil criteria agreement rose 1% after previous fall

Government goes for 50% biodiesel mix in 2026

(Recasts with energy minister's comment)

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 up until completion 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 prepared to launch the obligatory requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

"The ministerial policy has been signed," the minister Bahlil Lahadalia told press reporters, adding the government was working to increase the mandatory biodiesel mix to 50% next year.

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

The non-implementation on Jan. 1. had actually led to a 2.6% drop in the Malaysian palm oil benchmark contract on Thursday. On Friday, it recuperated by around 1%.

Fuel sellers and biodiesel manufacturers had stated they were not able to prepare agreements for biodiesel distribution without the decree.

The biodiesel allotment for 2025 showed a boost from 2024's estimated biodiesel intake of 12.98 KL, ministry data revealed on Friday.

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

"The remaining allocations will be cost market cost. The non-PSO allotment is set at 8.07 million KL," Bahlil said, adding the fund could not subsidise the rate space between the palm oil and fossil fuels for the general allocation.

BPDPKS, the firm in charge of gathering and handling the palm oil funds, estimated in November B40 would require a 68% aid increase.

To help fund that, Indonesia plans to increase its export levy for crude palm oil (CPO) to 10% from the current 7.5%, however for that to occur, another official regulation is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati