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Biodiesel allocation decree was waited for by industry

Indonesia had actually prepared to release 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 comment)

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 distribution, while offering the market up until the end 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 actually prepared 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 told reporters, adding the government was working to increase the compulsory biodiesel mix to 50% next year.

Dewi, a ministry senior authorities, said biodiesel producers and fuel sellers will be given till Feb. 28 to adapt to the B40 mix. She stated the delay was due to the fact that of technical challenges linked to aids for the fuel.

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

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

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

Of the overall allotment for this year, 7.55 million KL is for the public service obligation (PSO), which covers sectors such as public transportation, 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, including the fund could not subsidise the rate gap in between the palm oil and nonrenewable fuel sources for the total allowance.

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

To assist fund that, Indonesia plans to increase its export levy for unrefined palm oil (CPO) to 10% from the current 7.5%, but for that to take place, another main policy is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; modifying by John Mair, Savio D'Souza, Shri Navaratnam and Barbara Lewis)