Biodiesel allowance decree was waited for by industry

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

Palm oil standard contract rose 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 circulation, while offering the market up until completion of next month to adjust to the higher level of the fuel in the mix.

Indonesia, the world's largest exporter of palm oil, had prepared to introduce 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 authorities, stated biodiesel manufacturers and fuel sellers will be given up until Feb. 28 to adapt to the B40 mix. She said the hold-up was because of technical obstacles linked 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 recovered by around 1%.

Fuel retailers and biodiesel manufacturers had actually stated they were unable to prepare contracts for biodiesel distribution without the decree.

The biodiesel allowance for 2025 indicated an increase from 2024's approximated biodiesel intake of 12.98 KL, ministry information showed on Friday.

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

"The staying allotments will be cost market value. The non-PSO allotment is set at 8.07 million KL," Bahlil said, including the fund could not subsidise the cost gap in between the palm oil and nonrenewable fuel sources for the overall allowance.

BPDPKS, the firm in charge of collecting and handling the palm oil funds, approximated in November B40 would require a 68% subsidy increase.

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