Biodiesel allotment decree was waited for by market

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

Palm oil standard contract increased 1% after previous fall

Government intends 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 distribution, while giving the market till completion 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 actually prepared to release the obligatory requirement of 40% palm in biodiesel on Jan. 1, up from 35% now.

"The ministerial guideline has 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 sellers will be given till Feb. 28 to adjust to the B40 mix. She said the delay was since of technical obstacles connected to aids for the fuel.

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

Fuel merchants and biodiesel producers had actually stated they were unable to draw up contracts for biodiesel circulation without the decree.

The biodiesel allocation for 2025 indicated an increase from 2024's estimated biodiesel usage of 12.98 KL, ministry information revealed on Friday.

Of the total allowance 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 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, adding the fund might not subsidise the cost gap between the palm oil and nonrenewable fuel sources for the overall allowance.

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

To assist 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 regulation is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati