Biodiesel allowance decree was waited for by industry

Indonesia had actually prepared to release greater biodiesel mix on Jan. 1

Palm oil benchmark agreement increased 1% after previous fall

Government intends 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 assigning 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while offering the market till completion of next month to adjust to the greater level of the fuel in the mix.

Indonesia, the world's biggest exporter of palm oil, had actually planned to introduce the mandatory 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 told reporters, including the federal government was working to increase the necessary biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, stated biodiesel producers and fuel retailers will be given till Feb. 28 to adapt to the B40 mix. She said the hold-up was because of technical obstacles connected to aids for the fuel.

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

Fuel sellers and biodiesel manufacturers had actually said they were not able to prepare contracts for biodiesel circulation without the decree.

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

Of the total 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 allotment is set at 8.07 million KL," Bahlil said, adding the fund might not subsidise the price gap in between the palm oil and nonrenewable fuel sources for the general allowance.

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

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