Biodiesel allocation decree was waited for by industry

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

Palm oil benchmark contract increased 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 distribution, while providing the industry till the end of next month to adapt to the greater level of the fuel in the mix.

Indonesia, the world's biggest exporter of palm oil, had planned to launch the mandatory 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 reporters, adding the federal government was working to increase the necessary to 50% next year.

Eniya Listiani Dewi, a ministry senior official, stated biodiesel manufacturers and fuel sellers will be offered up until Feb. 28 to adjust to the B40 mix. She said 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 caused a 2.6% drop in the Malaysian palm oil criteria contract on Thursday. On Friday, it recovered by around 1%.

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

The biodiesel allocation for 2025 suggested a boost from 2024's approximated biodiesel intake of 12.98 KL, ministry information showed on Friday.

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

"The staying allocations will be cost market value. The non-PSO allocation is set at 8.07 million KL," Bahlil said, including the fund could not subsidise the cost space in between the palm oil and fossil fuels for the overall allocation.

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

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