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Biodiesel allotment decree was waited for by industry

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

Palm oil standard agreement 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 allocating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while providing the industry 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 release the obligatory 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 reporters, adding the government was working to increase the obligatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, said biodiesel producers and fuel sellers will be offered until Feb. 28 to adapt to the B40 mix. She said the delay was because of technical challenges connected to subsidies for the fuel.

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

Fuel merchants and biodiesel manufacturers had stated they were unable to prepare contracts for biodiesel circulation without the decree.

The biodiesel allocation for 2025 indicated an increase from 2024's approximated biodiesel intake of 12.98 KL, ministry information revealed on Friday.

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

"The staying allowances will be offered at market value. The non-PSO allowance 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 fuel sources for the total allotment.

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

To help fund that, Indonesia prepares to increase its export levy for crude palm oil (CPO) to 10% from the existing 7.5%, but for that to take place, another main policy is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; modifying by John Mair, Savio D'Souza, Shri Navaratnam and Barbara Lewis)