Biodiesel allotment decree was waited for by industry

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

Palm oil criteria agreement rose 1% after previous fall

Government goes for 50% biodiesel mix in 2026

(Recasts with energy minister's remark)

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 giving the market up until completion 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 planned to introduce the compulsory 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 told press reporters, adding the federal government was working to increase the necessary biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, stated biodiesel manufacturers and fuel merchants will be given up until Feb. 28 to adjust to the B40 mix. She stated the hold-up was since of technical difficulties linked to aids for the fuel.

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

Fuel sellers and biodiesel manufacturers had stated they were unable to draw up contracts for biodiesel distribution without the decree.

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

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

"The remaining allowances will be cost market value. The non-PSO allocation 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 general allocation.

BPDPKS, the company in charge of gathering and handling the palm oil funds, approximated in November B40 would need a 68% aid increase.

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