Biodiesel allowance decree was awaited by industry

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

Palm oil criteria 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 allocating 15.6 million kilolitres (KL) of biodiesel for 2025 distribution, while providing the industry 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 prepared to launch the obligatory 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 reporters, including the government was working to increase the obligatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, said biodiesel producers and fuel retailers will be provided till Feb. 28 to adjust to the B40 mix. She said the hold-up was since of technical difficulties connected to subsidies for the fuel.

The non-implementation on Jan. 1. had 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 producers had actually stated they were not able to prepare agreements for biodiesel distribution without the decree.

The biodiesel allocation for 2025 showed an increase from 2024's approximated biodiesel consumption of 12.98 KL, ministry data showed on Friday.

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

"The staying allotments will be cost market value. The non-PSO allowance is set at 8.07 million KL," Bahlil stated, adding the fund could not subsidise the rate gap between the palm oil and nonrenewable fuel sources for the general allotment.

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

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