Indonesia Signs 15.6 Mln Kilolitres Biodiesel Allocation For 2025

Biodiesel allotment decree was waited for by market


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


Palm oil benchmark agreement rose 1% after previous fall


Government aims 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 allocating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while providing the market until completion of next month to adapt to the greater level of the fuel in the mix.


Indonesia, the world's biggest of palm oil, had actually prepared to release the obligatory requirement of 40% palm oil fuel in biodiesel 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 obligatory biodiesel mix to 50% next year.


Eniya Listiani Dewi, a ministry senior official, said biodiesel producers and fuel sellers will be offered up until Feb. 28 to adapt to the B40 mix. She said the delay was due to the fact that of technical difficulties connected to aids for the fuel.


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


Fuel merchants and biodiesel producers had said they were not able to draw up contracts for biodiesel circulation without the decree.


The biodiesel allocation for 2025 showed a boost from 2024's estimated biodiesel consumption of 12.98 KL, ministry information showed on Friday.


Of the total allocation for this year, 7.55 million KL is for the public service commitment (PSO), which covers sectors such as public transportation, whose sales will be subsidised by the nation's palm oil fund.


"The staying allocations will be cost market value. The non-PSO allotment is set at 8.07 million KL," Bahlil said, including the fund could not subsidise the price gap in between the palm oil and fossil fuels for the total allotment.


BPDPKS, the company in charge of gathering 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 crude palm oil (CPO) to 10% from the existing 7.5%, but for that to take place, another main policy is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; modifying by John Mair, Savio D'Souza, Shri Navaratnam and Barbara Lewis)