Biodiesel allowance decree was waited for by industry

Indonesia had planned to introduce higher 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 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 circulation, while providing the market up until 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 prepared to launch the compulsory 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, adding the federal government was working to increase the obligatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, said biodiesel manufacturers and fuel retailers will be given up until Feb. 28 to adapt to the B40 mix. She stated the hold-up was because 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 retailers and biodiesel manufacturers had actually stated they were unable to draw up agreements for biodiesel distribution without the decree.

The biodiesel allowance for 2025 suggested a boost from 2024’s approximated biodiesel intake 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 responsibility (PSO), which covers sectors such as mass transit, whose sales will be subsidised by the nation’s palm oil fund.

“The staying allocations will be cost market value. The non-PSO allocation is set at 8.07 million KL,” Bahlil stated, including the fund might not subsidise the price space in between the palm oil and fossil fuels for the general allocation.

BPDPKS, the firm in charge of collecting and handling the palm oil funds, approximated in November B40 would require a 68% subsidy increase.

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 occur, another official regulation is required. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati