Biodiesel allotment decree was awaited by market

Indonesia had actually prepared to release greater biodiesel mix on Jan. 1

Palm oil standard agreement increased 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 distribution, while providing the market up until completion of next month to adjust to the higher level of the fuel in the mix.

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

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

Eniya Listiani Dewi, a ministry senior official, stated biodiesel producers and fuel merchants will be offered 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 actually caused a 2.6% drop in the Malaysian palm oil criteria agreement on Thursday. On Friday, it recovered by around 1%.

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

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

Of the overall allowance for this year, 7.55 million KL is for the general public service responsibility (PSO), which covers sectors such as public transport, whose sales will be subsidised by the country's palm oil fund.

"The remaining allotments will be cost market value. The non-PSO allocation is set at 8.07 million KL," Bahlil said, including the fund might not subsidise the cost gap in between the palm oil and sources for the general allocation.

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

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