Biodiesel allowance decree was waited for by market

Indonesia had actually planned to introduce higher biodiesel mix on Jan. 1

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

Eniya Listiani Dewi, a ministry senior authorities, stated biodiesel producers and fuel merchants will be up until Feb. 28 to adapt to the B40 mix. She said the delay was due to the fact that of technical difficulties connected to subsidies for the fuel.

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

Fuel sellers and biodiesel producers had stated they were not able to draw up agreements for biodiesel circulation without the decree.

The biodiesel allotment for 2025 showed an increase from 2024‘s approximated biodiesel usage of 12.98 KL, ministry data revealed on Friday.

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

"The staying allotments will be cost market value. The non-PSO allocation is set at 8.07 million KL,” Bahlil said, including the fund might not subsidise the rate gap between the palm oil and nonrenewable fuel sources for the general allocation.

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

To help finance that, Indonesia plans to increase its export levy for unrefined palm oil (CPO) to 10% from the present 7.5%, but for that to occur, another official guideline is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati