Biodiesel allocation decree was waited for by market

Indonesia had actually planned to launch greater biodiesel mix on Jan. 1

Palm oil benchmark agreement increased 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 designating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while giving the market till the end of next month to adjust 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 compulsory 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 informed press reporters, adding the federal government was working to increase the mandatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, stated biodiesel producers and fuel merchants will be given up until Feb. 28 to adapt to the B40 mix. She stated the delay was since of technical obstacles connected to subsidies for the fuel.

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

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

The biodiesel allowance for 2025 indicated a boost from 2024's approximated biodiesel consumption of 12.98 KL, ministry data showed on Friday.

Of the total allotment for this year, 7.55 million KL is for the public service responsibility (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 value. The non-PSO allocation is set at 8.07 million KL," Bahlil said, the fund could not subsidise the rate space in between the palm oil and nonrenewable fuel sources for the total allocation.

BPDPKS, the firm in charge of collecting and managing the palm oil funds, approximated in November B40 would need a 68% subsidy boost.

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