Biodiesel allocation decree was waited for by market

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

Palm oil criteria agreement increased 1% after previous fall

Government goes 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 market until completion of next month to adapt to the higher level of the fuel in the mix.

Indonesia, the world's largest exporter of palm oil, had actually prepared to release the necessary 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, including the federal government was working to increase the compulsory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, said biodiesel producers and fuel sellers will be offered till Feb. 28 to adjust to the B40 mix. She said the delay was due to the fact that of technical obstacles connected to aids for the fuel.

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

Fuel merchants and biodiesel producers had actually said they were not able to draw up agreements for biodiesel distribution without the decree.

The biodiesel allotment for 2025 showed an increase from 2024's approximated 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 commitment (PSO), which covers sectors such as public transport, whose sales will be subsidised by the country's palm oil fund.

"The remaining allowances will be cost market value. The non-PSO allotment is set at 8.07 million KL," Bahlil stated, adding the fund could not subsidise the rate space between the palm oil and nonrenewable fuel sources for the total allocation.

BPDPKS, the agency in charge of collecting and managing the palm oil funds, estimated in November B40 would require a 68% subsidy increase.

To assist finance that, Indonesia prepares to increase its export levy for unrefined palm oil (CPO) to 10% from the existing 7.5%, but for that to occur, another official guideline is required. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; editing by John Mair, Savio D'Souza, Shri Navaratnam and Barbara Lewis)