Biodiesel allotment decree was awaited by industry

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

Palm oil criteria contract rose 1% after previous fall

Government aims 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 a decree on Friday designating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while giving 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 prepared to launch the mandatory requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

"The ministerial regulation has been signed," the minister Bahlil Lahadalia informed reporters, adding the government was working to increase the compulsory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, stated biodiesel producers and fuel sellers will be given up until Feb. 28 to adapt to the B40 mix. She stated the hold-up was because of technical challenges connected to aids for the fuel.

The non-implementation on Jan. 1. had resulted in a 2.6% drop in the Malaysian palm oil criteria agreement on Thursday. On Friday, it recuperated by around 1%.

Fuel retailers and biodiesel producers had stated they were not able to draw up agreements for biodiesel circulation without the decree.

The biodiesel allotment for 2025 indicated a boost from 2024's estimated biodiesel intake of 12.98 KL, ministry information revealed on Friday.

Of the total allocation 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 remaining allocations will be sold at market value. The non-PSO allocation is set at 8.07 million KL," Bahlil said, including the fund might not subsidise the rate space between the palm oil and nonrenewable fuel sources for the general allowance.

BPDPKS, the agency in charge of gathering and handling the palm oil funds, approximated in November B40 would need a 68% aid increase.

To assist finance that, Indonesia plans to increase its export levy for crude palm oil (CPO) to 10% from the current 7.5%, but for that to occur, another main policy is required. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati