Biodiesel allotment decree was waited for by industry

Indonesia had actually planned to release greater biodiesel mix on Jan. 1

Palm oil criteria agreement rose 1% after previous fall

Government aims 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 providing the market until completion of next month to adjust to the greater level of the fuel in the mix.

Indonesia, the world's biggest exporter of palm oil, had prepared to release the necessary 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 informed reporters, including the federal government was working to increase the compulsory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, stated biodiesel producers and fuel merchants will be offered till Feb. 28 to adjust to the B40 mix. She said the delay was due to the fact that of technical challenges linked to subsidies for the fuel.

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

Fuel merchants and biodiesel manufacturers had actually said they were unable to draw up contracts for biodiesel circulation without the decree.

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

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

"The remaining allowances will be cost market cost. The non-PSO allocation is set at 8.07 million KL," Bahlil stated, adding the fund might not subsidise the price gap in between the palm oil and fossil fuels for the total allotment.

BPDPKS, the company in charge of collecting and handling the palm oil funds, estimated in November B40 would need a 68% subsidy boost.

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