Biodiesel allowance decree was awaited by market

Indonesia had actually prepared to launch greater biodiesel mix on Jan. 1

Palm oil standard contract increased 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 assigning 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while offering the market 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 release the obligatory requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

"The ministerial guideline has actually been signed," the minister Bahlil Lahadalia told reporters, including the federal government was working to increase the obligatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, stated biodiesel manufacturers and fuel merchants will be given till Feb. 28 to adjust to the B40 mix. She stated the hold-up was because of technical challenges linked to aids for the fuel.

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

Fuel retailers and biodiesel manufacturers had actually stated they were not able to draw up agreements for biodiesel distribution without the decree.

The biodiesel allocation for 2025 suggested an increase from 2024's estimated 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 obligation (PSO), which covers sectors such as mass transit, whose sales will be subsidised by the country's palm oil fund.

"The remaining allotments will be cost market value. The non-PSO allowance is set at 8.07 million KL," Bahlil said, including the fund could not subsidise the cost space in between the palm oil and fossil fuels for the general allocation.

BPDPKS, the agency in charge of gathering and managing the palm oil funds, estimated in November B40 would require a 68% aid increase.

To help finance that, Indonesia plans to increase its for unrefined palm oil (CPO) to 10% from the present 7.5%, but for that to take place, another official guideline is required. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati