Biodiesel allotment decree was waited for by industry

Indonesia had planned 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 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 industry 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 release 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 told reporters, including the was working to increase the necessary biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, stated biodiesel producers and fuel retailers will be provided until Feb. 28 to adjust to the B40 mix. She stated the hold-up was because of technical challenges connected to subsidies for the fuel.

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

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

The biodiesel allotment for 2025 showed an increase from 2024's approximated biodiesel intake of 12.98 KL, ministry data 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 remaining allowances will be cost market cost. The non-PSO allowance is set at 8.07 million KL," Bahlil stated, adding the fund might not subsidise the rate gap between the palm oil and fossil fuels for the general allowance.

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

To assist finance that, Indonesia plans to increase its export levy for unrefined palm oil (CPO) to 10% from the current 7.5%, but for that to occur, another main policy is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati