Biodiesel allotment decree was waited for by market

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

Palm oil standard 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 allocating 15.6 million kilolitres (KL) of biodiesel for 2025 distribution, while offering the market until the end of next month to adjust to the higher level of the fuel in the mix.

Indonesia, the world's largest exporter of palm oil, had planned to introduce the mandatory requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

"The ministerial guideline has actually been signed," the minister Bahlil Lahadalia told press reporters, adding the government was working to increase the compulsory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, stated biodiesel producers and fuel merchants will be given up until Feb. 28 to adjust to the B40 mix. She stated the hold-up was due to the fact that of technical difficulties connected to subsidies for the fuel.

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

Fuel retailers and biodiesel manufacturers had actually stated they were not able to prepare agreements for biodiesel circulation without the decree.

The biodiesel allowance for 2025 suggested a boost from 2024's estimated 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 public service obligation (PSO), which covers sectors such as public transportation, whose sales will be subsidised by the nation's palm oil fund.

"The staying allotments will be cost market cost. The non-PSO allocation is set at 8.07 million KL," Bahlil said, including the fund could not subsidise the rate space in between the palm oil and fossil fuels for the overall allowance.

BPDPKS, the firm in charge of collecting and handling 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 existing 7.5%, but for that to take place, another is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati