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Biodiesel allocation decree was waited for by market

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

Palm oil standard agreement increased 1% after previous fall

Government intends 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 (KL) of biodiesel for 2025 distribution, while offering the market up until the end of next month to adjust to the greater level of the fuel in the mix.

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

Eniya Listiani Dewi, a ministry senior official, said biodiesel producers and fuel retailers will be offered until Feb. 28 to adjust to the B40 mix. She stated the hold-up was because of technical obstacles linked to aids for the fuel.

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

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

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

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

"The staying allowances will be sold at market rate. The non-PSO allocation is set at 8.07 million KL," Bahlil stated, adding the fund could not subsidise the price space in between the palm oil and nonrenewable fuel sources for the total allowance.

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

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