Biodiesel allocation decree was waited for by market

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

Palm oil benchmark contract rose 1% after previous fall

Government intends 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 circulation, while giving the industry up until completion of next month to adapt to the greater level of the fuel in the mix.

Indonesia, the world's biggest exporter of palm oil, had actually planned to introduce 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 informed press reporters, including the government was working to increase the obligatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, said biodiesel manufacturers and fuel retailers will be given till Feb. 28 to adjust to the B40 mix. She said the hold-up was because of technical obstacles linked to aids for the fuel.

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

Fuel merchants and biodiesel manufacturers had said they were unable to prepare agreements for biodiesel circulation without the decree.

The biodiesel allowance for 2025 indicated a boost from 2024's estimated biodiesel intake of 12.98 KL, ministry information revealed 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 transport, whose sales will be subsidised by the country's palm oil fund.

"The staying allowances will be cost market value. The non-PSO allotment is set at 8.07 million KL," Bahlil stated, adding the fund could not subsidise the cost space between the palm oil and fossil fuels for the general allowance.

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

To assist fund that, Indonesia plans to increase its export levy for unrefined palm oil (CPO) to 10% from the present 7.5%, however for that to occur, another official regulation is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; editing by John Mair, Savio D'Souza, Shri Navaratnam and Barbara Lewis)