Biodiesel allotment decree was waited for by market

Indonesia had prepared to release higher biodiesel mix on Jan. 1

Palm oil standard contract increased 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 allocating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while offering 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 release the necessary requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

"The ministerial guideline has been signed," the minister Bahlil Lahadalia informed reporters, including 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 offered until Feb. 28 to adapt to the B40 mix. She said the hold-up was due to the fact that of technical obstacles connected to aids for the fuel.

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

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

The biodiesel allotment for 2025 showed a boost from 2024's approximated biodiesel usage of 12.98 KL, revealed on Friday.

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

"The remaining allotments will be sold at 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 overall allowance.

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

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