Biodiesel allocation decree was waited for by industry

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

Palm oil benchmark agreement rose 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 assigning 15.6 million kilolitres (KL) of biodiesel for 2025 distribution, while providing the market until completion 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 actually planned to release 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 reporters, including the government was working to increase the mandatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, said biodiesel manufacturers and fuel retailers will be offered up until Feb. 28 to adjust to the B40 mix. She stated the delay was because of technical obstacles connected to subsidies for the fuel.

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

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

The biodiesel allowance for 2025 indicated an increase from 2024's estimated biodiesel intake of 12.98 KL, ministry data showed on Friday.

Of the total allocation 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 country's palm oil fund.

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

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

To assist fund that, Indonesia plans to increase its export levy for crude palm oil (CPO) to 10% from the current 7.5%, but for that to take place, another main regulation is needed. (Reporting by Bernadette Christina Munthe, Nangoy, Dewi Kurniawati