Biodiesel allowance decree was waited for by industry

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

Palm oil criteria contract increased 1% after previous fall

Government goes 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 designating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while providing the market till the end 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 prepared to release the necessary 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 press reporters, adding the federal government was working to increase the necessary biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, said biodiesel producers and fuel retailers will be given till Feb. 28 to adapt to the B40 mix. She said the delay was since of technical difficulties linked to subsidies for the fuel.

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

Fuel merchants and biodiesel manufacturers had actually stated they were unable to prepare agreements for biodiesel distribution without the decree.

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

Of the total allotment 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 country's palm oil fund.

"The staying allotments will be sold at market price. The non-PSO allotment is set at 8.07 million KL," Bahlil said, including the fund might not subsidise the price space between the palm oil and nonrenewable fuel sources for the total allocation.

BPDPKS, the firm in charge of collecting and managing the palm oil funds, estimated in November B40 would need a 68% subsidy boost.

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