Biodiesel allocation decree was waited for by industry

Indonesia had actually planned to introduce greater biodiesel mix on Jan. 1

Palm oil criteria contract 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 allocating 15.6 million kilolitres (KL) of biodiesel for 2025 distribution, while providing the industry until the end of next month to adjust to the higher level of the fuel in the mix.

Indonesia, the world's largest exporter of palm oil, had actually prepared to launch the obligatory 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 informed press reporters, including the government was working to increase the compulsory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, stated biodiesel manufacturers and fuel merchants will be provided till Feb. 28 to adjust 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 actually led to a 2.6% drop in the Malaysian palm oil criteria contract on Thursday. On Friday, it recuperated by around 1%.

Fuel merchants and biodiesel producers had stated they were not able to draw up agreements for biodiesel distribution without the decree.

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

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

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

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

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 policy is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati