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Biodiesel allocation decree was waited for by industry


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


Palm oil benchmark agreement rose 1% after previous fall


Government aims 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 assigning 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while giving the industry till completion of next month to adapt to the higher level of the fuel in the mix.


Indonesia, the world's biggest exporter of palm oil, had actually prepared to launch the compulsory requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.


"The ministerial regulation has actually been signed," the minister Bahlil Lahadalia told 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 manufacturers and fuel sellers will be offered till Feb. 28 to adjust to the B40 mix. She said the hold-up was due to the fact that of technical challenges linked to subsidies for the fuel.


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


Fuel merchants and biodiesel producers had stated they were unable to draw up agreements for biodiesel distribution without the decree.


The biodiesel allotment for 2025 showed a boost from 2024's estimated biodiesel intake of 12.98 KL, ministry data revealed on Friday.


Of the overall allotment 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 country's palm oil fund.


"The remaining allotments will be sold at market rate. The non-PSO allocation is set at 8.07 million KL," Bahlil stated, including the fund might not subsidise the price gap in between the palm oil and nonrenewable fuel sources for the overall allowance.


BPDPKS, the firm in charge of collecting and handling the palm oil funds, approximated in November B40 would require a 68% aid boost.


To help fund that, Indonesia plans to increase its export levy for unrefined palm oil (CPO) to 10% from the present 7.5%, however for that to take place, another main policy is required. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; modifying by John Mair, Savio D'Souza, Shri Navaratnam and Barbara Lewis)