Biodiesel allotment decree was awaited by market

Indonesia had prepared to introduce higher 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 providing the industry until the end of next month to adjust to the higher level of the fuel in the mix.

Indonesia, the world's largest exporter of palm oil, had actually planned to release the mandatory requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

"The ministerial guideline has actually been signed," the minister Bahlil Lahadalia informed reporters, including 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 offered till Feb. 28 to adapt to the B40 mix. She stated the delay was due to the fact that of technical obstacles linked to subsidies for the fuel.

The non-implementation on Jan. 1. had caused a 2.6% drop in the Malaysian palm oil standard agreement on Thursday. On Friday, it recovered by around 1%.

Fuel retailers and biodiesel producers had said they were not able to draw up contracts for biodiesel distribution without the decree.

The biodiesel allowance for 2025 indicated a boost from 2024's approximated 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 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, adding the fund could not subsidise the rate gap in between the palm oil and nonrenewable fuel sources for the overall allocation.

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

To assist fund that, Indonesia prepares to increase its export levy for crude palm oil (CPO) to 10% from the current 7.5%, but for that to happen, another main guideline is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati