Biodiesel allotment decree was waited for by market

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

Palm oil criteria agreement 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 distribution, while providing the industry up until completion of next month to adjust to the greater level of the fuel in the mix.

Indonesia, the world's largest 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 guideline has actually been signed," the minister Bahlil Lahadalia informed press reporters, including the government was working to increase the compulsory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, said biodiesel manufacturers and fuel merchants will be offered till Feb. 28 to adapt to the B40 mix. She stated the delay was because of technical difficulties connected to subsidies for the fuel.

The non-implementation on Jan. 1. had actually caused a 2.6% drop in the Malaysian palm oil benchmark agreement on Thursday. On Friday, it recovered by around 1%.

Fuel merchants and biodiesel producers had actually said they were not able to draw up contracts 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 revealed on Friday.

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

"The staying allowances will be cost market value. The non-PSO allowance is set at 8.07 million KL," Bahlil said, adding the fund could not subsidise the price gap in between the palm oil and nonrenewable fuel sources for the overall allotment.

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

To assist fund that, Indonesia prepares to increase its export levy for unrefined palm oil (CPO) to 10% from the present 7.5%, however for that to take place, another main guideline is needed. (Reporting by Bernadette Christina Munthe, Nangoy, Dewi Kurniawati