Biodiesel allowance decree was by market

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

Palm oil criteria agreement rose 1% after previous fall

Government intends for 50% biodiesel mix in 2026

(Recasts with energy minister's remark)

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 providing the industry until the end of next month to adjust to the higher level of the fuel in the mix.

Indonesia, the world's biggest exporter of palm oil, had planned to launch the necessary 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, including the government was working to increase the necessary biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, stated biodiesel manufacturers and fuel retailers will be provided up until Feb. 28 to adapt to the B40 mix. She said the delay was because of technical obstacles 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 standard agreement on Thursday. On Friday, it recovered by around 1%.

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

The biodiesel allowance for 2025 suggested an increase from 2024's approximated biodiesel intake of 12.98 KL, ministry information revealed on Friday.

Of the total allotment 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 nation'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 rate gap in between the palm oil and nonrenewable fuel sources for the overall allocation.

BPDPKS, the agency in charge of gathering 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 crude palm oil (CPO) to 10% from the present 7.5%, but for that to happen, another official guideline is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; modifying by John Mair, Savio D'Souza, Shri Navaratnam and Barbara Lewis)