Biodiesel allotment decree was waited for by industry

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

Palm oil benchmark contract rose 1% after previous fall

Government aims for 50% biodiesel mix in 2026

(Recasts with energy minister's comment)

By Bernadette Christina and 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 giving the market up until 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 planned to introduce the mandatory 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, including the federal government was working to increase the mandatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, said biodiesel manufacturers and fuel merchants will be given till Feb. 28 to adapt to the B40 mix. She said the hold-up was because of technical challenges connected to subsidies for the fuel.

The non-implementation on Jan. 1. had led to a 2.6% drop in the Malaysian palm oil criteria agreement on Thursday. On Friday, it recuperated by around 1%.

Fuel merchants and biodiesel producers had actually said they were unable to draw up agreements for biodiesel distribution without the decree.

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

Of the total allowance for this year, 7.55 million KL is for the general public service obligation (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 rate. The non-PSO allotment is set at 8.07 million KL," Bahlil stated, adding the fund could not subsidise the price space in between the palm oil and nonrenewable fuel sources for the overall allowance.

BPDPKS, the company in charge of gathering and managing the palm oil funds, estimated in November B40 would need a 68% subsidy boost.

To assist finance that, Indonesia prepares to increase its export levy for crude palm oil (CPO) to 10% from the current 7.5%, however for that to occur, another official guideline is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati