Biodiesel allotment decree was waited for by market

Indonesia had prepared to launch greater 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 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 industry 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 release the mandatory 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, including the federal government was working to increase the compulsory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, stated biodiesel manufacturers and fuel sellers will be provided up until Feb. 28 to adjust to the B40 mix. She said the hold-up was due to the fact that of technical challenges 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 recuperated by around 1%.

Fuel merchants and biodiesel producers had actually stated they were unable to prepare contracts for biodiesel circulation without the decree.

The biodiesel allocation for 2025 suggested an increase from 2024's estimated biodiesel consumption of 12.98 KL, ministry information showed on Friday.

Of the total allotment 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 country's palm oil fund.

"The remaining allowances will be cost market cost. The non-PSO allotment is set at 8.07 million KL," Bahlil stated, 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 handling the palm oil funds, estimated in November B40 would need a 68% aid boost.

To help finance that, Indonesia prepares to increase its export levy for crude palm oil (CPO) to 10% from the present 7.5%, however for that to take place, another official policy is required. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; editing by John Mair, Savio D'Souza, Shri Navaratnam and Barbara Lewis)