Biodiesel allocation decree was waited for by market

Indonesia had prepared to launch greater biodiesel mix on Jan. 1

Palm oil criteria contract rose 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 designating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while giving the market till the end of next month to adjust to the greater level of the fuel in the mix.

Indonesia, the world's biggest exporter of palm oil, had prepared to release the mandatory 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, adding the federal government was working to increase the necessary biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, said biodiesel producers and fuel retailers will be provided till Feb. 28 to adapt to the B40 mix. She stated the hold-up was since of technical challenges connected to subsidies 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 recovered by around 1%.

Fuel merchants and biodiesel producers had stated they were unable to draw up agreements for biodiesel distribution without the decree.

The biodiesel allowance for 2025 indicated an increase from 2024's estimated biodiesel usage of 12.98 KL, ministry information revealed on Friday.

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

"The remaining allowances will be sold at market price. The non-PSO allotment is set at 8.07 million KL," Bahlil stated, including the fund might not subsidise the price gap between the palm oil and nonrenewable fuel sources for the general allowance.

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

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