Biodiesel allotment decree was awaited by market


Indonesia had actually planned to launch higher biodiesel mix on Jan. 1


Palm oil standard contract 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 distribution, while providing the market till the end of next month to adapt to the higher level of the fuel in the mix.


Indonesia, the world's largest exporter of palm oil, had prepared to launch 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 informed reporters, including the federal government was working to increase the necessary biodiesel mix to 50% next year.


Eniya Listiani Dewi, a ministry senior authorities, stated biodiesel producers and fuel retailers will be provided until Feb. 28 to adapt to the B40 mix. She said the delay was due to the fact that of technical challenges linked to subsidies for the fuel.


The non-implementation on Jan. 1. had led to a 2.6% drop in the Malaysian palm oil criteria contract on Thursday. On Friday, it recovered by around 1%.


Fuel merchants and biodiesel producers had stated they were not able to draw up contracts for biodiesel circulation without the decree.


The biodiesel allocation for 2025 suggested a boost from 2024's estimated biodiesel consumption of 12.98 KL, ministry data revealed on Friday.


Of the overall allocation for this year, 7.55 million KL is for the public service obligation (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 price. The non-PSO allotment is set at 8.07 million KL," Bahlil said, including the fund might not subsidise the price space in between the palm oil and fossil fuels for the overall allocation.


BPDPKS, the company in charge of gathering and managing the palm oil funds, estimated in November B40 would require a 68% subsidy boost.


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