Biodiesel allowance decree was awaited by industry

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

Palm oil benchmark agreement increased 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 designating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while giving the industry until completion of next month to adapt to the higher level of the fuel in the mix.

Indonesia, the world's largest exporter of palm oil, had actually to launch the necessary 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 press reporters, including the federal government was working to increase the compulsory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, said biodiesel manufacturers and fuel retailers will be given till Feb. 28 to adapt to the B40 mix. She said the hold-up was because 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 benchmark contract on Thursday. On Friday, it recuperated by around 1%.

Fuel merchants and biodiesel manufacturers had actually said they were not able to draw up agreements for biodiesel distribution without the decree.

The biodiesel allowance for 2025 indicated a boost 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 public service commitment (PSO), which covers sectors such as public transport, whose sales will be subsidised by the nation's palm oil fund.

"The staying allowances will be sold at market value. The non-PSO allocation is set at 8.07 million KL," Bahlil stated, adding the fund might not subsidise the cost gap in between the palm oil and fossil fuels for the general allotment.

BPDPKS, the firm in charge of collecting and handling the palm oil funds, approximated in November B40 would need a 68% subsidy increase.

To assist fund that, Indonesia plans to increase its export levy for crude palm oil (CPO) to 10% from the existing 7.5%, but for that to take place, another main policy is required. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati