Biodiesel allocation decree was waited for by industry

Indonesia had actually planned to introduce greater 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 remark)

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 giving the up until the end 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 launch the necessary requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

“The ministerial policy has been signed,” the minister Bahlil Lahadalia informed reporters, adding the federal government was working to increase the necessary biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, said biodiesel manufacturers and fuel sellers will be given till Feb. 28 to adjust to the B40 mix. She stated the delay was because of technical challenges connected to aids for the fuel.

The non-implementation on Jan. 1. had actually caused a 2.6% drop in the Malaysian palm oil criteria contract on Thursday. On Friday, it recuperated by around 1%.

Fuel retailers and biodiesel manufacturers had said they were unable to prepare agreements for biodiesel distribution without the decree.

The biodiesel allowance for 2025 showed a boost from 2024’s approximated biodiesel usage of 12.98 KL, ministry data revealed 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 allowances will be cost market value. The non-PSO allotment is set at 8.07 million KL,” Bahlil stated, including the fund could not subsidise the cost gap in between the palm oil and fossil fuels for the general allotment.

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

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