Biodiesel allocation decree was waited for by market

Indonesia had actually planned to release higher biodiesel mix on Jan. 1

Palm oil standard agreement rose 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 assigning 15.6 million kilolitres (KL) of biodiesel for 2025 distribution, while giving the market up until completion of next month to adapt to the higher level of the fuel in the mix.

Indonesia, the world’s biggest exporter of palm oil, had planned to launch 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, the government was working to increase the mandatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, stated biodiesel producers and fuel retailers will be provided till Feb. 28 to adjust to the B40 mix. She said the delay was because of technical difficulties linked to aids for the fuel.

The non-implementation on Jan. 1. had actually 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 manufacturers had said they were unable to prepare contracts for biodiesel distribution without the decree.

The biodiesel allotment for 2025 indicated an increase from 2024’s estimated biodiesel intake of 12.98 KL, ministry data revealed on Friday.

Of the total allocation for this year, 7.55 million KL is for the public service obligation (PSO), which covers sectors such as public transport, whose sales will be subsidised by the nation’s palm oil fund.

“The staying allocations will be offered at market value. The non-PSO allocation is set at 8.07 million KL,” Bahlil said, adding the fund could not subsidise the price space between the palm oil and nonrenewable fuel sources for the total allotment.

BPDPKS, the agency in charge of collecting and managing the palm oil funds, estimated in November B40 would require a 68% aid boost.

To help finance that, Indonesia plans to increase its export levy for unrefined palm oil (CPO) to 10% from the existing 7.5%, but for that to occur, another official policy is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati