Biodiesel allotment decree was awaited by market
Indonesia had actually planned to introduce higher biodiesel mix on Jan. 1
Palm oil standard agreement increased 1% after previous fall
Government goes 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 completion of next month to adapt to the higher level of the fuel in the mix.
Indonesia, the world's largest exporter of palm oil, had actually planned to release the mandatory 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 told reporters, including the federal government was working to increase the obligatory biodiesel mix to 50% next year.
Eniya Listiani Dewi, a ministry senior official, stated biodiesel producers and fuel merchants will be offered up until Feb. 28 to adapt to the B40 mix. She said the delay was because of technical obstacles connected to subsidies for the fuel.
The non-implementation on Jan. 1. had caused a 2.6% drop in the Malaysian palm oil standard contract on Thursday. On Friday, it recuperated by around 1%.
Fuel retailers and biodiesel producers had actually stated they were unable to draw up agreements for biodiesel distribution without the decree.
The biodiesel allocation for 2025 suggested an increase from 2024's estimated biodiesel consumption of 12.98 KL, ministry data showed on Friday.
Of the overall allotment for this year, 7.55 million KL is for the general public service commitment (PSO), which covers sectors such as public transport, whose sales will be subsidised by the nation's palm oil fund.
"The remaining allotments will be cost market value. The non-PSO allotment is set at 8.07 million KL," Bahlil stated, including the fund might not subsidise the rate gap in between the palm oil and fossil fuels for the general allowance.
BPDPKS, the company in charge of gathering and handling the palm oil funds, estimated in November B40 would need a 68% subsidy boost.
To help fund that, Indonesia prepares to increase its export levy for crude palm oil (CPO) to 10% from the present 7.5%, however for that to happen, another main policy is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; editing by John Mair, Savio D'Souza, Shri Navaratnam and Barbara Lewis)