Biodiesel allocation decree was awaited by market

Indonesia had prepared to release 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 comment)

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 circulation, while providing the market till the end of next month to adjust to the higher level of the fuel in the mix.

Indonesia, the world's biggest exporter of palm oil, had prepared 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 informed reporters, including the 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 merchants will be given till Feb. 28 to adjust to the B40 mix. She stated the hold-up was due to the fact that of technical obstacles connected to aids 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 recovered by around 1%.

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

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

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

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

BPDPKS, the agency in charge of gathering and handling the palm oil funds, estimated in November B40 would require a 68% aid increase.

To assist 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 take place, another official policy is required. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati