Biodiesel allowance decree was awaited by industry

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

Palm oil criteria agreement rose 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 till the end 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 actually planned to launch the compulsory 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 told 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 manufacturers and fuel merchants will be offered until Feb. 28 to adapt to the B40 mix. She said the hold-up was due to the fact that of technical challenges connected to aids for the fuel.

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

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

The biodiesel allocation for 2025 suggested a boost from 2024's approximated intake of 12.98 KL, ministry information showed on Friday.

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

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

BPDPKS, the agency in charge of gathering and managing the palm oil funds, estimated in November B40 would require a 68% subsidy boost.

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