Biodiesel allocation decree was waited for by industry

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

Palm oil criteria contract increased 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 circulation, while offering the industry until completion of next month to adapt to the greater level of the fuel in the mix.

Indonesia, the world's largest exporter of palm oil, had actually 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 told press 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 manufacturers and fuel retailers will be given up until Feb. 28 to adapt to the B40 mix. She said the delay was due to the fact that of linked to subsidies for the fuel.

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

Fuel retailers and biodiesel manufacturers had said they were not able to prepare agreements for biodiesel circulation without the decree.

The biodiesel allocation for 2025 indicated a boost from 2024's estimated biodiesel usage 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 commitment (PSO), which covers sectors such as mass transit, whose sales will be subsidised by the nation's palm oil fund.

"The remaining allowances will be cost market value. The non-PSO allotment is set at 8.07 million KL," Bahlil stated, adding the fund might not subsidise the cost gap between the palm oil and fossil fuels for the general allotment.

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

To assist finance 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 regulation is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati