Biodiesel allocation decree was waited for by industry

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

Palm oil benchmark 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 assigning 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while offering the industry up until the end of next month to adjust to the higher level of the fuel in the mix.

Indonesia, the world’s largest exporter of palm oil, had prepared to introduce the necessary requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

“The ministerial guideline has actually been signed,” the minister Bahlil Lahadalia told reporters, including the federal government was working to increase the obligatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, stated biodiesel producers and fuel sellers will be provided until Feb. 28 to adapt to the B40 mix. She said the hold-up was because of technical challenges linked to subsidies for the fuel.

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

Fuel merchants and biodiesel producers had stated they were not able to draw up contracts for biodiesel circulation without the decree.

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

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

“The staying allocations will be sold at market value. The non-PSO allocation is set at 8.07 million KL,” Bahlil stated, including the fund could not subsidise the rate gap in between the palm oil and nonrenewable fuel sources for the total allowance.

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

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