Biodiesel allowance decree was awaited by industry


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


Palm oil benchmark 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 allocating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while giving the market till the end 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 actually planned to launch the obligatory 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 told press reporters, including the federal government was working to increase the compulsory biodiesel mix to 50% next year.


Eniya Listiani Dewi, a ministry senior authorities, said biodiesel manufacturers and fuel sellers will be provided till Feb. 28 to adjust to the B40 mix. She said the delay was because of technical difficulties connected to aids for the fuel.


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


Fuel sellers and biodiesel producers had said they were unable to draw up contracts for biodiesel circulation without the decree.


The biodiesel allowance for 2025 suggested an increase from 2024's approximated biodiesel consumption of 12.98 KL, ministry data revealed 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 mass transit, whose sales will be subsidised by the nation's palm oil fund.


"The staying allocations 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 space in between the palm oil and nonrenewable fuel sources for the overall allotment.


BPDPKS, the company in charge of collecting and handling the palm oil funds, estimated in November B40 would need a 68% subsidy boost.


To assist fund that, Indonesia plans to increase its export levy for crude palm oil (CPO) to 10% from the existing 7.5%, but for that to occur, another official regulation is required. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; modifying by John Mair, Savio D'Souza, Shri Navaratnam and Barbara Lewis)