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Biodiesel allotment decree was awaited by industry

Indonesia had planned to launch higher biodiesel mix on Jan. 1

Palm oil standard contract rose 1% after previous fall

Government goes for 50% biodiesel mix in 2026

(Recasts with 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 providing the market till the end of next month to adapt 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 necessary requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

"The ministerial policy has actually been signed," the minister Bahlil Lahadalia informed reporters, including the federal government was working to increase the compulsory biodiesel mix to 50% next year.

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

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

Fuel retailers and biodiesel manufacturers had stated they were not able to draw up contracts for biodiesel distribution without the decree.

The biodiesel allotment for 2025 suggested a boost from 2024's approximated biodiesel intake of 12.98 KL, ministry information revealed on Friday.

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

"The remaining allocations will be offered at market rate. The non-PSO allowance is set at 8.07 million KL," Bahlil stated, adding the fund might not subsidise the rate space in between the palm oil and fossil fuels for the total allowance.

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

To help fund that, Indonesia plans to increase its export levy for unrefined palm oil (CPO) to 10% from the current 7.5%, but for that to take place, 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)