Biodiesel allotment decree was waited for by market

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

Palm oil standard contract increased 1% after previous fall

Government goes 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 assigning 15.6 million kilolitres (KL) of biodiesel for 2025 distribution, while giving the industry up until 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 release the mandatory requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

"The ministerial guideline has actually been signed," the minister Bahlil Lahadalia told press reporters, adding the government was working to increase the mandatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, said biodiesel manufacturers and fuel sellers will be offered up until Feb. 28 to adjust to the B40 mix. She said the hold-up was since of technical challenges linked to aids for the fuel.

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

Fuel merchants and biodiesel producers had said they were not able to draw up contracts for biodiesel circulation without the decree.

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

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

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

BPDPKS, the agency in charge of gathering and managing the palm oil funds, approximated in November B40 would need a 68% aid boost.

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