Biodiesel allowance decree was waited for by industry

Indonesia had actually prepared to introduce higher biodiesel mix on Jan. 1

Palm oil standard contract rose 1% after previous fall

Government aims 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 15.6 million kilolitres (KL) of biodiesel for 2025 distribution, while offering the industry until the end of next month to adapt to the greater level of the fuel in the mix.

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

Eniya Listiani Dewi, a ministry senior authorities, stated biodiesel manufacturers and fuel sellers will be provided up until Feb. 28 to adjust to the B40 mix. She stated the hold-up was since of technical difficulties connected to aids 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 recuperated by around 1%.

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

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

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

"The staying allocations will be sold at market value. The non-PSO allowance is set at 8.07 million KL," Bahlil said, including the fund might not subsidise the price space between the palm oil and nonrenewable fuel sources for the general allowance.

BPDPKS, the firm in charge of collecting and handling the palm oil funds, approximated in November B40 would need a 68% aid increase.

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