Biodiesel allotment decree was awaited by market

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

Palm oil standard agreement 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 assigning 15.6 million kilolitres (KL) of biodiesel for 2025 distribution, while giving the industry till the end of next month to adjust to the higher level of the fuel in the mix.

Indonesia, the world’s biggest exporter of palm oil, had actually planned to launch 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 informed reporters, including the government was working to increase the mandatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, said biodiesel manufacturers and fuel sellers will be given up until Feb. 28 to adjust to the B40 mix. She stated the hold-up was because 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 benchmark contract on Thursday. On Friday, it recovered by around 1%.

Fuel sellers and biodiesel manufacturers had stated they were unable to prepare agreements for biodiesel distribution without the decree.

The biodiesel allotment for 2025 suggested a boost from 2024’s approximated biodiesel intake of 12.98 KL, ministry information showed on Friday.

Of the total 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 remaining allotments will be offered at market value. The non-PSO allowance is set at 8.07 million KL,” Bahlil said, adding the fund could not subsidise the price space between the palm oil and fossil fuels for the general allotment.

BPDPKS, the firm in charge of gathering 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 existing 7.5%, however for that to happen, another official policy is required. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati