Biodiesel allowance decree was waited for by market

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

Palm oil criteria contract increased 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 assigning 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while giving the industry until completion of next month to adjust to the higher level of the fuel in the mix.

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

"The ministerial regulation has actually been signed," the minister Bahlil Lahadalia informed reporters, adding the federal government was working to increase the necessary biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, stated biodiesel producers and fuel sellers will be provided until Feb. 28 to adjust to the B40 mix. She stated the delay was due to the fact that of technical challenges connected to subsidies for the fuel.

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

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

The biodiesel allocation for 2025 indicated an increase 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 responsibility (PSO), which covers sectors such as mass transit, whose sales will be subsidised by the country's palm oil fund.

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

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

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