Biodiesel allocation decree was waited for by market

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

Palm oil standard contract increased 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 circulation, while giving the market up until the end of next month to adjust to the greater level of the fuel in the mix.

Indonesia, the world's largest exporter of palm oil, had prepared to introduce 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 Lahadalia informed reporters, adding the government was working to increase the necessary biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, said biodiesel producers and fuel retailers will be offered up until Feb. 28 to adapt to the B40 mix. She said the delay was since of technical obstacles linked to subsidies for the fuel.

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

and biodiesel producers had said they were unable to draw up contracts for biodiesel circulation without the decree.

The biodiesel allocation for 2025 indicated an increase from 2024's estimated biodiesel intake of 12.98 KL, ministry data revealed on Friday.

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

"The remaining allocations will be cost market value. The non-PSO allotment is set at 8.07 million KL," Bahlil stated, including the fund might not subsidise the cost space in between the palm oil and fossil fuels for the general allocation.

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

To assist finance that, Indonesia prepares to increase its export levy for unrefined palm oil (CPO) to 10% from the present 7.5%, however for that to happen, another official guideline is required. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati