Biodiesel allocation decree was awaited by market

Indonesia had prepared to release higher 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 designating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while providing the industry 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 planned to release 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 reporters, adding the government was working to increase the compulsory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, stated biodiesel producers and fuel sellers will be provided till Feb. 28 to adapt to the B40 mix. She said the delay was due to the fact that of technical obstacles connected to subsidies for the fuel.

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

Fuel retailers and biodiesel manufacturers had actually said they were unable to draw up agreements for biodiesel circulation without the decree.

The biodiesel allotment for 2025 suggested an increase from 2024's approximated biodiesel usage of 12.98 KL, ministry information 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 remaining allotments will be sold at market value. The non-PSO allowance is set at 8.07 million KL," Bahlil stated, including the fund could not subsidise the price gap in between the palm oil and nonrenewable fuel sources for the general allowance.

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

To help finance that, Indonesia prepares to its export levy for unrefined palm oil (CPO) to 10% from the present 7.5%, however for that to happen, another main policy is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati