Biodiesel allowance decree was waited for by industry

Indonesia had prepared to introduce higher biodiesel mix on Jan. 1

Palm oil benchmark contract rose 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 designating 15.6 million kilolitres (KL) of biodiesel for 2025 distribution, 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 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, adding the government was working to increase the mandatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a official, stated biodiesel producers and fuel retailers will be given till Feb. 28 to adjust to the B40 mix. She said the delay was because of technical difficulties linked to subsidies for the fuel.

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

Fuel merchants and biodiesel manufacturers had said they were unable to draw up agreements for biodiesel circulation without the decree.

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

Of the overall allotment for this year, 7.55 million KL is for the general public service obligation (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 cost market price. The non-PSO allowance is set at 8.07 million KL," Bahlil stated, including the fund might not subsidise the cost space between the palm oil and fossil fuels for the total allowance.

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