Biodiesel allocation decree was waited for by market

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

Palm oil benchmark agreement rose 1% after previous fall

Government aims 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 designating 15.6 million kilolitres (KL) of biodiesel for 2025 distribution, 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 largest exporter of palm oil, had actually planned to release the mandatory requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

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

Eniya Listiani Dewi, a ministry senior authorities, said biodiesel manufacturers and fuel sellers will be offered till Feb. 28 to adjust to the B40 mix. She said the hold-up was since of technical difficulties 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 actually stated they were not able to draw up contracts for biodiesel circulation without the decree.

The biodiesel allowance for 2025 showed an increase from 2024‘s approximated biodiesel intake of 12.98 KL, ministry information showed on Friday.

Of the total allocation for this year, 7.55 million KL is for the public service (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 sold at market price. The non-PSO allowance is set at 8.07 million KL,” Bahlil stated, adding the fund might not subsidise the rate gap between the palm oil and nonrenewable fuel sources for the general allocation.

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

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