Biodiesel allowance decree was awaited by industry

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

Palm oil benchmark contract rose 1% after previous fall

Government intends 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 market till completion of next month to adjust to the greater level of the fuel in the mix.

Indonesia, the world's biggest exporter of palm oil, had actually prepared to release the obligatory 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 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 manufacturers and fuel merchants will be given till Feb. 28 to adjust to the B40 mix. She stated the hold-up was since of technical difficulties linked to subsidies for the fuel.

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

Fuel retailers and biodiesel manufacturers had actually said they were not able to draw up agreements for biodiesel circulation without the decree.

The biodiesel allocation for 2025 indicated an increase from 2024's approximated biodiesel consumption of 12.98 KL, ministry information revealed on Friday.

Of the total 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 nation's palm oil fund.

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

BPDPKS, the company in charge of collecting and managing the palm oil funds, approximated in November B40 would require 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 happen, another main guideline is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati