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Biodiesel allotment decree was awaited by industry

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

Palm oil criteria contract 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 designating 15.6 million kilolitres (KL) of biodiesel for 2025 distribution, while providing the market till 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 prepared to launch the obligatory 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 informed press reporters, adding the government was working to increase the necessary biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, stated biodiesel producers and fuel sellers will be given up until Feb. 28 to adjust to the B40 mix. She said the delay was due to the fact that of technical obstacles linked to subsidies for the fuel.

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

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

The biodiesel allotment for 2025 suggested an increase from 2024's approximated biodiesel intake of 12.98 KL, ministry information showed on Friday.

Of the total allocation 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 country's palm oil fund.

"The remaining allocations will be sold at market price. The non-PSO allowance is set at 8.07 million KL," Bahlil stated, including the fund might not subsidise the rate gap between the palm oil and fossil fuels for the overall allotment.

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