Biodiesel allotment decree was waited for by market

Indonesia had planned to release greater biodiesel mix on Jan. 1

Palm oil criteria 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 circulation, while giving the industry up until 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 prepared to release the necessary 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 informed press reporters, including the government was working to increase the compulsory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, said biodiesel manufacturers and fuel retailers will be offered until Feb. 28 to adjust to the B40 mix. She said the delay was since 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 criteria contract on Thursday. On Friday, it recovered by around 1%.

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

The biodiesel allotment for 2025 suggested a boost from 2024's approximated biodiesel usage 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 staying allocations will be cost market rate. The non-PSO allowance is set at 8.07 million KL," Bahlil stated, including the fund might not subsidise the price gap between the palm oil and nonrenewable fuel sources 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% subsidy increase.

To assist finance that, Indonesia prepares to increase its export levy for unrefined palm oil (CPO) to 10% from the current 7.5%, but for that to occur, 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)