Biodiesel allotment decree was waited for by industry

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

Palm oil benchmark agreement rose 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 circulation, while offering the market till completion of next month to adjust to the greater level of the fuel in the mix.

Indonesia, the world's biggest exporter of palm oil, had actually planned to introduce 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 compulsory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, stated biodiesel manufacturers and fuel sellers will be until Feb. 28 to adjust 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 led to a 2.6% drop in the Malaysian palm oil standard agreement on Thursday. On Friday, it recuperated by around 1%.

Fuel merchants and biodiesel manufacturers had actually stated they were not able to draw up contracts for biodiesel circulation without the decree.

The biodiesel allocation for 2025 suggested a boost from 2024's approximated biodiesel intake of 12.98 KL, ministry information showed on Friday.

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

"The remaining allowances will be offered at market value. The non-PSO allowance is set at 8.07 million KL," Bahlil said, including the fund might not subsidise the rate gap 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 boost.

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