Biodiesel allotment decree was awaited by industry

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

Palm oil criteria 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 designating 15.6 million kilolitres (KL) of biodiesel for 2025 distribution, while giving the market up until completion 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 actually planned to introduce the necessary requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

"The ministerial guideline has been signed," the minister Bahlil Lahadalia informed press reporters, adding the federal government was working to increase the obligatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, stated biodiesel manufacturers and fuel sellers will be given up until Feb. 28 to adjust to the B40 mix. She stated the hold-up was due to the fact that of technical challenges linked to subsidies for the fuel.

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

Fuel sellers and biodiesel producers had actually stated they were unable to draw up contracts for biodiesel circulation without the decree.

The biodiesel allowance for 2025 showed an increase from 2024's approximated 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 transport, whose sales will be subsidised by the nation's palm oil fund.

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

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

To assist fund that, Indonesia prepares to increase its export levy for unrefined palm oil (CPO) to 10% from the present 7.5%, however for that to occur, another official policy is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; editing by John Mair, Savio D'Souza, Shri Navaratnam and Barbara Lewis)