Biodiesel allotment decree was awaited by market

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

Palm oil criteria agreement increased 1% after previous fall

Government goes for 50% biodiesel mix in 2026

( 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 giving the market till 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 release the necessary requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

"The ministerial policy has actually been signed," the minister Bahlil Lahadalia informed press 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 provided till Feb. 28 to adjust to the B40 mix. She stated the hold-up was because of technical difficulties 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 criteria agreement on Thursday. On Friday, it recuperated by around 1%.

Fuel merchants and biodiesel manufacturers had stated they were not able to draw up contracts for biodiesel circulation without the decree.

The biodiesel allowance for 2025 suggested an increase from 2024's approximated biodiesel consumption of 12.98 KL, ministry information revealed on Friday.

Of the total allotment for this year, 7.55 million KL is for the general 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 allotments will be cost market price. The non-PSO allotment is set at 8.07 million KL," Bahlil stated, including the fund could not subsidise the rate space in between the palm oil and fossil fuels for the overall allowance.

BPDPKS, the firm in charge of gathering and handling the palm oil funds, approximated in November B40 would need a 68% subsidy boost.

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