Biodiesel allocation decree was awaited by industry

Indonesia had prepared to release higher 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 allocating 15.6 million kilolitres (KL) of biodiesel for 2025 distribution, while providing the market until the end of next month to adapt to the greater level of the fuel in the mix.

Indonesia, the world’s largest exporter of palm oil, had actually planned to release the necessary 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 told press reporters, adding the federal government was working to increase the compulsory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, stated biodiesel producers and fuel merchants will be offered till Feb. 28 to adapt to the B40 mix. She said the hold-up was because of technical challenges linked to aids for the fuel.

The non-implementation on Jan. 1. had 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 producers had actually stated they were unable to prepare contracts for biodiesel circulation without the decree.

The biodiesel allotment for 2025 suggested a boost from 2024’s estimated biodiesel usage of 12.98 KL, ministry information showed on Friday.

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

"The staying allotments will be offered at market value. The non-PSO allotment is set at 8.07 million KL,” Bahlil said, including the fund could not subsidise the price gap between the palm oil and nonrenewable fuel sources for the general allocation.

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

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