Biodiesel allowance decree was waited for by industry

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

Palm oil standard contract rose 1% after previous fall

Government aims 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 distribution, while providing the industry till completion of next month to adjust to the higher level of the fuel in the mix.

Indonesia, the world's largest exporter of palm oil, had actually planned to release the necessary 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 press reporters, including the government was working to increase the obligatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, stated biodiesel manufacturers and fuel merchants will be offered until Feb. 28 to adapt to the B40 mix. She said the was because of technical difficulties 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 recuperated by around 1%.

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

The biodiesel allowance for 2025 showed a boost from 2024's approximated biodiesel intake of 12.98 KL, ministry information showed on Friday.

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

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

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

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