Biodiesel allowance decree was awaited by market

Indonesia had actually prepared to launch greater 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 offering the industry till 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 release 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 press reporters, adding the federal government was working to the mandatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, stated biodiesel manufacturers and fuel sellers will be offered up until Feb. 28 to adjust to the B40 mix. She stated the hold-up was because of technical difficulties linked to subsidies for the fuel.

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

Fuel merchants and biodiesel manufacturers had stated they were not able to draw up contracts for biodiesel circulation without the decree.

The biodiesel allocation for 2025 suggested an increase from 2024’s approximated biodiesel usage of 12.98 KL, ministry data showed 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 transportation, whose sales will be subsidised by the nation’s palm oil fund.

“The remaining allowances will be offered at market rate. The non-PSO allotment is set at 8.07 million KL,” Bahlil stated, adding the fund could not subsidise the rate gap in between the palm oil and fossil fuels for the overall allotment.

BPDPKS, the agency in charge of gathering and managing the palm oil funds, approximated in November B40 would require a 68% subsidy increase.

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