Biodiesel allotment decree was awaited by industry

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

Palm oil standard 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 designating 15.6 million kilolitres (KL) of biodiesel for 2025 distribution, while giving the market until completion 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 prepared to launch the compulsory requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

"The ministerial policy 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 sellers will be offered until Feb. 28 to adapt to the B40 mix. She said the hold-up was since of technical obstacles connected to subsidies for the fuel.

The non-implementation on Jan. 1. had actually caused a 2.6% drop in the Malaysian palm oil criteria contract on Thursday. On Friday, it recuperated by around 1%.

Fuel retailers and biodiesel producers had actually stated they were unable to draw up agreements for biodiesel distribution without the decree.

The biodiesel allowance for 2025 showed a boost from 2024's estimated biodiesel consumption of 12.98 KL, information showed on Friday.

Of the overall allocation 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 nation's palm oil fund.

"The staying allowances will be sold at market value. The non-PSO allotment is set at 8.07 million KL," Bahlil said, including the fund could not subsidise the rate gap in between the palm oil and fossil fuels for the total allowance.

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

To help finance that, Indonesia plans to increase its export levy for unrefined palm oil (CPO) to 10% from the current 7.5%, but for that to take place, another official guideline is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati