Biodiesel allocation decree was awaited by market

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

Palm oil criteria contract increased 1% after previous fall

Government intends 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 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 planned to introduce 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 told reporters, including the federal government was working to increase the obligatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, stated biodiesel producers and fuel merchants will be given till Feb. 28 to adapt to the B40 mix. She said the hold-up was due to the fact that of technical obstacles 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 contract on Thursday. On Friday, it recuperated by around 1%.

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

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

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

"The remaining allowances will be offered at market value. The non-PSO allowance is set at 8.07 million KL," Bahlil stated, adding the fund could not subsidise the price gap in between the palm oil and nonrenewable fuel sources for the total allocation.

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

To assist fund that, Indonesia plans to increase its export levy for unrefined palm oil (CPO) to 10% from the current 7.5%, however for that to happen, another main policy is required. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati