Biodiesel allowance decree was waited for by industry

Indonesia had planned to introduce greater biodiesel mix on Jan. 1

Palm oil benchmark contract increased 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 designating 15.6 million kilolitres (KL) of biodiesel for 2025 distribution, while providing the industry until 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 prepared to launch the compulsory 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 government was working to increase the compulsory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, stated biodiesel producers and fuel sellers will be provided till Feb. 28 to adjust to the B40 mix. She stated the delay was since of technical challenges connected to subsidies for the fuel.

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

Fuel sellers and biodiesel manufacturers had said they were unable to draw up agreements for biodiesel distribution without the decree.

The biodiesel allotment for 2025 indicated an increase from 2024's estimated biodiesel usage of 12.98 KL, ministry data showed 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 transport, whose sales will be subsidised by the country's palm oil fund.

The staying allocations will be sold at market price. The non-PSO allocation is set at 8.07 million KL, Bahlil said, adding the fund might not subsidise the rate space in between the palm oil and fossil fuels for the total allotment.

BPDPKS, the agency 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 unrefined palm oil (CPO) to 10% from the existing 7.5%, however for that to happen, another official guideline is required. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati