Biodiesel allowance decree was waited for by industry

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

Palm oil criteria contract 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 distribution, while providing the industry 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 planned to launch the compulsory 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, the government was working to increase the necessary biodiesel mix to 50% next year.

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

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

Fuel sellers and biodiesel producers had stated they were not able to prepare agreements for biodiesel distribution without the decree.

The biodiesel allowance for 2025 indicated an increase from 2024’s estimated biodiesel consumption of 12.98 KL, ministry information revealed 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 public transport, whose sales will be subsidised by the nation’s palm oil fund.

“The remaining allocations will be cost market cost. The non-PSO allotment is set at 8.07 million KL,” Bahlil said, adding the fund might not subsidise the rate gap between the palm oil and nonrenewable fuel sources for the overall allotment.

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

To help fund that, Indonesia plans to increase its export levy for unrefined 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