Biodiesel allowance decree was waited for by market

Indonesia had actually prepared to introduce greater biodiesel mix on Jan. 1

Palm oil criteria contract increased 1% after previous fall

Government aims 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 distribution, while giving the market until 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 prepared to launch the mandatory 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 informed press reporters, including the government was working to increase the obligatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, said biodiesel manufacturers and fuel retailers will be provided up until Feb. 28 to adapt to the B40 mix. She stated the hold-up was due to the fact that of technical obstacles connected to aids for the fuel.

The non-implementation on Jan. 1. had caused a 2.6% drop in the Malaysian palm oil standard contract on Thursday. On Friday, it recuperated 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 allowance for 2025 showed an increase from 2024's approximated usage of 12.98 KL, ministry information revealed on Friday.

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

"The remaining allocations will be cost market value. The non-PSO allocation is set at 8.07 million KL," Bahlil stated, including the fund might not subsidise the rate space between the palm oil and fossil fuels for the overall allotment.

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

To help finance 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 main policy is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati