Biodiesel allowance decree was waited for by industry

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

Palm oil standard agreement increased 1% after previous fall

Government aims 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 circulation, while offering the industry up until the end of next month to adapt to the higher level of the fuel in the mix.

Indonesia, the world's biggest exporter of palm oil, had planned to launch the mandatory requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

"The ministerial guideline has been signed," the minister Bahlil Lahadalia told press reporters, adding the federal government was working to increase the compulsory biodiesel mix to 50% next year.

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

The non-implementation on Jan. 1. had actually resulted in a 2.6% drop in the Malaysian palm oil benchmark contract on Thursday. On Friday, it recuperated by around 1%.

Fuel merchants and biodiesel manufacturers had said they were unable to prepare contracts for biodiesel distribution without the decree.

The biodiesel allocation for 2025 indicated an increase from 2024's approximated 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 responsibility (PSO), which covers sectors such as public transport, whose sales will be subsidised by the nation's palm oil fund.

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

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

To assist fund that, Indonesia prepares to increase its export levy for unrefined palm oil (CPO) to 10% from the existing 7.5%, but for that to happen, another official guideline is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; modifying by John Mair, Savio D'Souza, Shri Navaratnam and Barbara Lewis)