Biodiesel allocation decree was awaited by market

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

Palm oil standard agreement increased 1% after previous fall

Government aims 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 allocating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while giving the market till 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 obligatory 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 necessary biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, stated biodiesel producers and fuel retailers will be given 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 led to a 2.6% drop in the Malaysian palm oil criteria agreement on Thursday. On Friday, it recuperated by around 1%.

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

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

Of the total allocation 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 country's palm oil fund.

"The remaining allocations will be cost market value. The non-PSO allocation is set at 8.07 million KL," Bahlil said, adding the fund might not subsidise the rate gap between the palm oil and fossil fuels for the total allocation.

BPDPKS, the firm in charge of gathering and handling the palm oil funds, estimated in November B40 would require a 68% aid increase.

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