Biodiesel allocation decree was waited for by industry

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

Palm oil standard agreement increased 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 designating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while offering the industry till completion of next month to adjust 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 policy has been signed," the minister Bahlil Lahadalia informed press reporters, adding the federal government was working to increase the necessary biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, said biodiesel manufacturers and fuel merchants will be provided up until Feb. 28 to adapt to the B40 mix. She stated the hold-up was due to the fact that of technical obstacles connected to aids for the fuel.

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

Fuel retailers and biodiesel manufacturers had actually stated they were not able to prepare agreements for biodiesel circulation without the decree.

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

Of the overall allotment for this year, 7.55 million KL is for the general 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 allowances will be sold at market value. The non-PSO allotment is set at 8.07 million KL," Bahlil said, adding the fund could not subsidise the price space between the palm oil and fossil fuels for the overall allocation.

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

To help fund that, Indonesia prepares 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)