Biodiesel allotment decree was awaited by market

Indonesia had actually planned to introduce greater 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 biodiesel for 2025 distribution, while offering the market until completion 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 prepared to introduce the mandatory requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

"The ministerial policy has actually been signed," the minister Bahlil Lahadalia told reporters, including the federal government was working to increase the necessary biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, said biodiesel manufacturers and fuel merchants will be provided up until Feb. 28 to adapt to the B40 mix. She said the hold-up was due to the fact that of technical challenges linked to for the fuel.

The non-implementation on Jan. 1. had actually resulted in 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 said they were unable to draw up contracts for biodiesel distribution without the decree.

The biodiesel allowance for 2025 indicated a boost from 2024's estimated biodiesel usage of 12.98 KL, ministry information showed on Friday.

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

"The remaining allowances will be offered at market value. The non-PSO allotment is set at 8.07 million KL," Bahlil stated, adding the fund might not subsidise the cost space between the palm oil and nonrenewable fuel sources for the general allowance.

BPDPKS, the agency in charge of collecting and managing the palm oil funds, estimated in November B40 would need a 68% subsidy increase.

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