Biodiesel allocation decree was waited for by industry

Indonesia had actually prepared to release higher on Jan. 1

Palm oil benchmark agreement increased 1% after previous fall

Government goes for 50% biodiesel mix in 2026

(Recasts 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 allocating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while giving the industry up until completion 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 actually prepared to introduce the necessary requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

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

Eniya Listiani Dewi, a ministry senior official, stated biodiesel producers and fuel merchants will be offered till Feb. 28 to adapt to the B40 mix. She stated the delay was because of technical obstacles connected to aids for the fuel.

The non-implementation on Jan. 1. had caused a 2.6% drop in the Malaysian palm oil criteria agreement on Thursday. On Friday, it recovered by around 1%.

Fuel sellers and biodiesel producers had said they were unable to draw up contracts for biodiesel circulation without the decree.

The biodiesel allotment for 2025 suggested a boost from 2024's estimated biodiesel consumption of 12.98 KL, ministry information showed on Friday.

Of the total allotment for this year, 7.55 million KL is for the general public service obligation (PSO), which covers sectors such as public transport, whose sales will be subsidised by the nation's palm oil fund.

"The remaining allowances will be cost market cost. The non-PSO allowance is set at 8.07 million KL," Bahlil stated, including the fund could not subsidise the cost gap between the palm oil and nonrenewable fuel sources for the overall allocation.

BPDPKS, the company in charge of gathering and managing the palm oil funds, estimated in November B40 would require a 68% subsidy increase.

To assist fund that, Indonesia plans to increase its export levy for crude palm oil (CPO) to 10% from the current 7.5%, but for that to occur, another main guideline is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati