Biodiesel allocation decree was waited for by industry

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

Palm oil benchmark agreement 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 allocating 15.6 million kilolitres (KL) of biodiesel for 2025 distribution, while offering the industry up until the end of next month to adapt to the higher level of the fuel in the mix.

Indonesia, the world's biggest exporter of palm oil, had planned to launch 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 government was working to increase the obligatory biodiesel mix to 50% next year.

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

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

Fuel retailers and biodiesel manufacturers had actually said they were unable to prepare contracts for biodiesel circulation without the decree.

The biodiesel allowance for 2025 indicated an increase from 2024's estimated biodiesel consumption of 12.98 KL, ministry data showed on Friday.

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

"The remaining allotments will be cost market value. The non-PSO allotment is set at 8.07 million KL," Bahlil stated, adding the fund could not subsidise the rate space between the palm oil and nonrenewable fuel sources for the general allowance.

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

To help 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 occur, another main guideline is required. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; editing by John Mair, Savio D'Souza, Shri Navaratnam and Barbara Lewis)