Biodiesel allotment decree was waited for by market

Indonesia had prepared to introduce greater biodiesel mix on Jan. 1

Palm oil benchmark 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 designating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while offering the industry until completion of next month to adapt to the higher level of the fuel in the mix.

Indonesia, the world's largest 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 regulation has actually been signed," the minister Bahlil Lahadalia told press reporters, adding the government was working to increase the compulsory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, stated biodiesel producers and will be given up until Feb. 28 to adjust to the B40 mix. She stated the delay was due to the fact that of technical difficulties linked to aids for the fuel.

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

Fuel sellers and biodiesel producers had actually said they were unable to prepare contracts for biodiesel distribution without the decree.

The biodiesel allocation for 2025 indicated an increase from 2024's estimated biodiesel usage of 12.98 KL, ministry data revealed on Friday.

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

"The staying allocations will be cost market value. The non-PSO allocation is set at 8.07 million KL," Bahlil said, adding the fund might not subsidise the rate space between the palm oil and fossil fuels for the general allocation.

BPDPKS, the agency in charge of collecting and managing the palm oil funds, approximated in November B40 would need a 68% subsidy increase.

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