Biodiesel allowance decree was awaited by market

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

Palm oil standard agreement 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 designating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while offering the industry up 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 planned to release the necessary requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

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

Eniya Listiani Dewi, a ministry senior authorities, said biodiesel manufacturers and fuel merchants will be given up until Feb. 28 to adapt to the B40 mix. She stated the delay was due to the fact that of technical difficulties connected to aids for the fuel.

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

Fuel sellers and biodiesel producers had stated they were unable to draw up agreements for biodiesel distribution without the decree.

The biodiesel allotment for 2025 suggested an increase from 2024's estimated usage of 12.98 KL, ministry data 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 country's palm oil fund.

"The staying allowances will be offered at market value. The non-PSO allotment is set at 8.07 million KL," Bahlil said, including the fund might not subsidise the rate space between the palm oil and fossil fuels for the overall allotment.

BPDPKS, the company in charge of collecting and managing 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 unrefined palm oil (CPO) to 10% from the present 7.5%, but for that to happen, another main guideline is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; modifying by John Mair, Savio D'Souza, Shri Navaratnam and Barbara Lewis)