Biodiesel allocation decree was awaited by industry

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

Palm oil standard agreement 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 assigning 15.6 million (KL) of biodiesel for 2025 circulation, while providing 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 planned to introduce the mandatory requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

"The ministerial regulation has been signed," the minister Bahlil Lahadalia told press reporters, including the 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 sellers will be provided until Feb. 28 to adapt to the B40 mix. She said the delay was due to the fact that of technical difficulties connected to subsidies for the fuel.

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

Fuel merchants and biodiesel manufacturers had said they were unable to draw up agreements for biodiesel distribution without the decree.

The biodiesel allocation for 2025 indicated a boost from 2024's estimated biodiesel consumption of 12.98 KL, ministry data showed on Friday.

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

"The remaining allowances will be sold at market value. The non-PSO allowance is set at 8.07 million KL," Bahlil said, including the fund might not subsidise the cost space between the palm oil and fossil fuels for the total allotment.

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

To assist fund 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 official policy is required. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati