Indonesia Signs 15.6 Mln Kilolitres Biodiesel Allocation For 2025

Biodiesel allotment decree was waited for by market


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


Palm oil standard contract increased 1% after previous fall


Government intends 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 distribution, while providing the market up until completion of next month to adjust to the higher level of the fuel in the mix.


Indonesia, the world's largest exporter of palm oil, had planned to launch the compulsory requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.


"The ministerial regulation has actually been signed," the minister Bahlil Lahadalia informed reporters, adding the government was working to increase the mandatory biodiesel mix to 50% next year.


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


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


Fuel merchants and biodiesel manufacturers had stated they were unable to draw up agreements for without the decree.


The biodiesel allotment for 2025 suggested a boost from 2024's estimated biodiesel consumption of 12.98 KL, ministry data revealed on Friday.


Of the total allotment for this year, 7.55 million KL is for the general 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 allotments will be sold at market value. The non-PSO allocation is set at 8.07 million KL," Bahlil stated, including the fund might not subsidise the cost gap in between the palm oil and nonrenewable fuel sources for the total allotment.


BPDPKS, the firm in charge of gathering and managing the palm oil funds, estimated in November B40 would need a 68% subsidy increase.


To help fund that, Indonesia prepares to increase its export levy for crude palm oil (CPO) to 10% from the present 7.5%, but for that to happen, another official regulation is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; modifying by John Mair, Savio D'Souza, Shri Navaratnam and Barbara Lewis)