Biodiesel allocation decree was awaited by market

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

Palm oil standard agreement rose 1% after previous fall

Government aims 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 designating 15.6 million kilolitres (KL) of biodiesel for 2025 distribution, 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 prepared to release the necessary 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 informed press reporters, including the federal government was working to increase the necessary biodiesel mix to 50% next year.

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

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

Fuel sellers and biodiesel manufacturers had said they were not able to prepare contracts for biodiesel distribution without the decree.

The biodiesel allocation for 2025 suggested a boost from 2024's estimated 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 general public service responsibility (PSO), which covers sectors such as public transport, whose sales will be subsidised by the country's palm oil fund.

"The remaining allocations will be cost market value. The non-PSO allocation is set at 8.07 million KL," Bahlil said, adding the fund might not subsidise the cost space between the palm oil and fossil fuels for the total allocation.

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

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