Biodiesel allowance decree was waited for by industry

Indonesia had actually planned to introduce 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 distribution, while giving the industry 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 actually planned to launch 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, adding the federal government was working to increase the mandatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, stated biodiesel producers and fuel merchants will be provided till Feb. 28 to adapt to the B40 mix. She said the hold-up was because of technical difficulties connected to subsidies for the fuel.

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

Fuel retailers and biodiesel manufacturers had said they were not able to draw up contracts for biodiesel distribution without the decree.

The biodiesel allowance for 2025 showed an increase from 2024’s estimated biodiesel usage of 12.98 KL, ministry data showed on Friday.

Of the total allowance 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 staying allowances will be sold at market rate. The non-PSO allocation is set at 8.07 million KL,” Bahlil stated, including the fund might not subsidise the rate space in between the palm oil and fossil fuels for the total allocation.

BPDPKS, the company in charge of and managing the palm oil funds, approximated in November B40 would require a 68% aid boost.

To help fund that, Indonesia plans to increase its export levy for crude palm oil (CPO) to 10% from the present 7.5%, however for that to occur, another main regulation is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati