Biodiesel allotment decree was awaited by market

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

Palm oil standard 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 assigning 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while providing the market until completion 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 prepared to introduce the obligatory requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

“The ministerial regulation has been signed,” the minister Bahlil Lahadalia informed reporters, adding the government was working to increase the mandatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, stated biodiesel manufacturers and fuel sellers will be given until Feb. 28 to adjust to the B40 mix. She stated the delay was because of technical challenges linked to aids for the fuel.

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

Fuel merchants and biodiesel manufacturers had actually stated they were unable to draw up contracts for biodiesel distribution without the decree.

The biodiesel allotment for 2025 indicated a boost from 2024’s approximated biodiesel consumption of 12.98 KL, ministry information showed on Friday.

Of the overall allotment 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 country’s palm .

“The staying allowances will be cost market price. The non-PSO allowance is set at 8.07 million KL,” Bahlil stated, including the fund could not subsidise the price space between the palm oil and fossil fuels for the general allocation.

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

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