Biodiesel allowance decree was waited for by industry

Indonesia had planned to launch greater biodiesel mix on Jan. 1

Palm oil standard contract rose 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 allocating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while giving the market up 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 planned to launch the compulsory requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

"The ministerial regulation 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, said 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 contract on Thursday. On Friday, it recovered by around 1%.

Fuel sellers and biodiesel producers had actually stated they were unable to prepare agreements for biodiesel circulation without the decree.

The biodiesel allowance for 2025 suggested a boost from 2024's approximated biodiesel intake of 12.98 KL, ministry data showed 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 allowances will be cost market price. The non-PSO allotment is set at 8.07 million KL," Bahlil stated, including the fund could not subsidise the cost space between the palm oil and fossil fuels for the general allotment.

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

To help fund that, Indonesia prepares to increase its export levy for crude palm oil (CPO) to 10% from the existing 7.5%, but for that to take place, another official policy is required. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati