Biodiesel allotment decree was awaited by industry

Indonesia had prepared to release higher biodiesel mix on Jan. 1

Palm oil benchmark contract rose 1% after previous fall

Government goes 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 providing the market till 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 prepared to introduce the necessary 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 press reporters, adding the government was working to increase the obligatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, said biodiesel manufacturers and fuel merchants will be provided until Feb. 28 to adjust to the B40 mix. She stated the delay was due to the fact that of technical difficulties connected to aids for the fuel.

The non-implementation on Jan. 1. had caused 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 stated they were unable to prepare contracts for biodiesel circulation without the decree.

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

Of the overall allowance 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 allotments will be offered at market value. The non-PSO allowance is set at 8.07 million KL," Bahlil stated, including the fund could not subsidise the rate gap between the palm oil and fossil fuels for the overall allotment.

BPDPKS, the agency in charge of collecting and handling the palm oil funds, estimated in November B40 would need a 68% aid increase.

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