Biodiesel allocation decree was awaited by industry
Indonesia had actually prepared 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 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 circulation, while giving the market until the end of next month to adjust 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 on Jan. 1, up from 35% now.
"The ministerial policy has been signed," the minister Bahlil Lahadalia informed reporters, adding the federal government was working to increase the compulsory biodiesel mix to 50% next year.
Eniya Listiani Dewi, a ministry senior official, said biodiesel producers and fuel merchants will be given up until Feb. 28 to adjust to the B40 mix. She said the delay was due to the fact that of technical difficulties linked to subsidies for the fuel.
The non-implementation on Jan. 1. had caused a 2.6% drop in the Malaysian palm oil criteria agreement on Thursday. On Friday, it recovered by around 1%.
Fuel retailers and biodiesel producers had stated they were unable to prepare agreements for biodiesel circulation without the decree.
The biodiesel allotment for 2025 suggested an increase from 2024's approximated biodiesel usage of 12.98 KL, ministry data showed on Friday.
Of the total allotment 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 country's palm oil fund.
"The remaining allowances will be cost market rate. The non-PSO allocation is set at 8.07 million KL," Bahlil stated, adding the fund might not subsidise the price gap between the palm oil and fossil fuels for the general allotment.
BPDPKS, the company in charge of collecting and handling the palm oil funds, estimated in November B40 would require a 68% subsidy boost.
To assist fund that, Indonesia plans to increase its export levy for crude palm oil (CPO) to 10% from the present 7.5%, but for that to happen, another official policy is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati
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Indonesia Signs 15.6 Mln Kilolitres Biodiesel Allocation For 2025
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