Biodiesel allowance decree was waited for by industry

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

Palm oil criteria contract rose 1% after previous fall

Government intends 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 assigning 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while giving the industry until the end of next month to adapt to the greater level of the fuel in the mix.

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

Eniya Listiani Dewi, a ministry senior authorities, stated biodiesel producers and fuel merchants will be provided until Feb. 28 to adjust to the B40 mix. She stated the hold-up was since of technical difficulties linked to aids for the fuel.

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

Fuel retailers and biodiesel manufacturers had actually stated they were unable to draw up contracts for biodiesel circulation without the decree.

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

Of the overall allocation 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 allocations will be offered at market value. The non-PSO allowance is set at 8.07 million KL," Bahlil said, including the fund might not subsidise the rate space in between the palm oil and nonrenewable fuel sources for the general allotment.

BPDPKS, the firm in charge of collecting and managing the palm oil funds, approximated in November B40 would require a 68% subsidy increase.

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