Biodiesel allocation decree was awaited by market


Indonesia had actually prepared to launch greater biodiesel mix on Jan. 1


Palm oil benchmark contract increased 1% after previous fall


Government aims 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 until the end 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 actually planned 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 government was working to increase the necessary biodiesel mix to 50% next year.


Eniya Listiani Dewi, a ministry senior official, stated biodiesel manufacturers and fuel retailers will be offered till Feb. 28 to adjust to the B40 mix. She stated the hold-up was due to the fact that of technical challenges connected to subsidies for the fuel.


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


Fuel retailers and biodiesel manufacturers had said they were unable to prepare contracts for biodiesel circulation without the decree.


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


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


"The remaining allowances will be offered at market rate. The non-PSO allotment is set at 8.07 million KL," Bahlil said, adding the fund could not subsidise the price space in between the palm oil and fossil fuels for the total allotment.


BPDPKS, the firm in charge of gathering 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 existing 7.5%, however for that to happen, another main guideline is required. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; editing by John Mair, Savio D'Souza, Shri Navaratnam and Barbara Lewis)