Biodiesel allocation decree was awaited by market

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

Palm oil criteria agreement increased 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 allocating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while offering the industry till the end of next month to adjust to the greater level of the fuel in the mix.

Indonesia, the world's biggest exporter of palm oil, had actually planned to launch 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 informed reporters, including the 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 retailers will be provided till Feb. 28 to adjust to the B40 mix. She stated the hold-up was because of technical difficulties connected to subsidies for the fuel.

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

Fuel sellers and biodiesel producers had actually said they were unable to draw up agreements for biodiesel distribution without the decree.

The biodiesel allotment for 2025 suggested an increase from 2024's approximated biodiesel intake of 12.98 KL, ministry data showed on Friday.

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

"The staying allocations will be sold at market cost. The non-PSO allowance is set at 8.07 million KL," Bahlil stated, adding the fund might not subsidise the rate gap between the palm oil and fossil fuels for the general allocation.

BPDPKS, the agency in charge of gathering and handling the palm oil funds, approximated in November B40 would require a 68% aid boost.

To assist finance that, Indonesia prepares to increase its export levy for crude palm oil (CPO) to 10% from the current 7.5%, however for that to take place, another main policy is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati