Biodiesel allotment decree was awaited by industry

Indonesia had prepared to release greater biodiesel mix on Jan. 1

Palm oil benchmark contract rose 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 allocating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while giving the market till completion of next month to adapt to the greater level of the fuel in the mix.

Indonesia, the world's biggest exporter of palm oil, had prepared to release the necessary requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

"The ministerial regulation has actually 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, stated biodiesel producers and fuel sellers will be given till Feb. 28 to adapt to the B40 mix. She stated the delay was since of technical obstacles linked 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 retailers and biodiesel manufacturers had stated they were unable to prepare agreements for biodiesel distribution without the decree.

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

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

"The staying allotments 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 price space in between the palm oil and nonrenewable for the general allocation.

BPDPKS, the firm in charge of gathering and managing the palm oil funds, estimated 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 existing 7.5%, however for that to happen, another official guideline is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati