Biodiesel allocation decree was awaited by market

Indonesia had planned to launch greater biodiesel mix on Jan. 1

Palm oil benchmark contract 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 designating 15.6 million kilolitres (KL) of biodiesel for 2025 distribution, while giving 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 planned to launch the obligatory 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 informed reporters, including the government was working to increase the necessary biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, said biodiesel manufacturers and fuel retailers will be provided until Feb. 28 to adjust to the B40 mix. She said the delay was due to the fact that of technical challenges connected to aids for the fuel.

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

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

The biodiesel allowance for 2025 showed a boost from 2024’s approximated biodiesel consumption of 12.98 KL, ministry data revealed 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 remaining allowances will be cost market price. The non-PSO allocation is set at 8.07 million KL,” Bahlil said, adding the fund might not subsidise the rate space between the palm oil and fossil fuels for the general allocation.

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

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