Biodiesel allocation decree was awaited by market

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

Palm oil criteria contract rose 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 assigning 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while providing the industry until the end of next month to adapt to the greater level of the fuel in the mix.

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

"The ministerial regulation has been signed," the minister Bahlil Lahadalia informed reporters, including the government was working to increase the obligatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, stated biodiesel manufacturers and fuel sellers will be provided till Feb. 28 to adapt to the B40 mix. She said the delay was since of technical difficulties connected to aids for the fuel.

The on Jan. 1. had resulted in a 2.6% drop in the Malaysian palm oil criteria contract on Thursday. On Friday, it recovered by around 1%.

Fuel merchants and biodiesel manufacturers had said they were not able to prepare agreements for biodiesel circulation without the decree.

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

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

"The remaining allotments 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 overall allocation.

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

To assist finance that, Indonesia plans to increase its export levy for unrefined palm oil (CPO) to 10% from the existing 7.5%, but for that to occur, another main policy is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati