Biodiesel allowance decree was awaited by market

Indonesia had actually planned to release higher biodiesel mix on Jan. 1

Palm oil benchmark agreement 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 allocating 15.6 million kilolitres (KL) of for 2025 distribution, while offering the market up until the end 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 planned to introduce the necessary 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, including the federal government was working to increase the compulsory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, stated biodiesel producers and fuel merchants will be given up until Feb. 28 to adjust to the B40 mix. She stated the delay was since of technical challenges 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 criteria agreement on Thursday. On Friday, it recuperated by around 1%.

Fuel merchants and biodiesel producers had stated they were not able to draw up agreements for biodiesel circulation without the decree.

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

Of the overall allowance 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 staying allowances will be sold at market value. The non-PSO allotment is set at 8.07 million KL," Bahlil stated, adding the fund might not subsidise the rate space in between the palm oil and nonrenewable fuel sources for the general allocation.

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

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