Biodiesel allotment decree was waited for by industry

Indonesia had actually prepared to launch higher 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 allocating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while giving the industry until the end of next month to adjust to the higher level of the fuel in the mix.

Indonesia, the world's largest exporter of palm oil, had prepared to launch the compulsory requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

"The ministerial policy has been signed," the minister Bahlil Lahadalia told press 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 producers and fuel retailers will be given up until Feb. 28 to adapt to the B40 mix. She said the delay was because of technical challenges connected to aids for the fuel.

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

Fuel retailers and biodiesel manufacturers had said they were not able to prepare contracts for biodiesel circulation without the decree.

The biodiesel allotment for 2025 showed an increase from 2024's estimated biodiesel usage of 12.98 KL, ministry data showed on Friday.

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

"The staying allocations will be cost market cost. The non-PSO allocation is set at 8.07 million KL," Bahlil stated, including the fund might not subsidise the rate space in between the palm oil and nonrenewable fuel sources for the total allocation.

BPDPKS, the company in charge of gathering and handling the palm oil funds, estimated in November B40 would require a 68% subsidy increase.

To help finance that, Indonesia plans to increase its export levy for crude palm oil (CPO) to 10% from the current 7.5%, however for that to occur, another official regulation is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; modifying by John Mair, Savio D'Souza, Shri Navaratnam and Barbara Lewis)