Biodiesel allowance decree was awaited by industry

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

Palm oil standard agreement increased 1% after previous fall

Government intends 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 kilolitres (KL) of biodiesel for 2025 circulation, while providing the industry 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 planned to release the obligatory 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 press reporters, adding the government was working to increase the compulsory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, stated biodiesel manufacturers and fuel sellers will be given till Feb. 28 to adapt to the B40 mix. She stated the delay was since of technical difficulties connected to aids for the fuel.

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

Fuel merchants and biodiesel producers had said they were not able to prepare agreements for biodiesel circulation without the decree.

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

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

"The staying allowances will be cost market value. The non-PSO allocation is set at 8.07 million KL," Bahlil said, including the fund might not subsidise the price space in between the palm oil and nonrenewable fuel for the overall allocation.

BPDPKS, the agency in charge of collecting and managing the palm oil funds, approximated in November B40 would require a 68% aid boost.

To help finance that, Indonesia prepares to increase its export levy for crude palm oil (CPO) to 10% from the existing 7.5%, but for that to take place, another main guideline is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; editing by John Mair, Savio D'Souza, Shri Navaratnam and Barbara Lewis)