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Indonesia Signs 15.6 Mln Kilolitres Biodiesel Allocation For 2025

Biodiesel allotment decree was waited for by market

Indonesia had actually planned to introduce greater biodiesel mix on Jan. 1

Palm oil benchmark 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 designating 15.6 million kilolitres (KL) of biodiesel for 2025 distribution, while giving the market up until completion of next month to adapt to the higher level of the fuel in the mix.

Indonesia, the world’s largest exporter of palm oil, had actually prepared to launch the necessary requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

“The ministerial guideline has been signed,” the minister Bahlil Lahadalia told press reporters, adding the federal government was working to increase the necessary biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, said biodiesel manufacturers and fuel merchants will be provided until Feb. 28 to adjust to the B40 mix. She said the delay was due to the fact that of linked to subsidies for the fuel.

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

Fuel retailers and biodiesel producers had stated they were unable to prepare contracts for biodiesel circulation without the decree.

The biodiesel allotment for 2025 indicated an increase from 2024’s estimated biodiesel intake of 12.98 KL, ministry data showed on Friday.

Of the total allowance for this year, 7.55 million KL is for the general public service obligation (PSO), which covers sectors such as public transportation, whose sales will be subsidised by the country’s palm oil fund.

“The staying allowances will be offered at market price. The non-PSO allocation is set at 8.07 million KL,” Bahlil said, including the fund could not subsidise the cost space between the palm oil and fossil fuels for the total allowance.

BPDPKS, the agency in charge of collecting and handling the palm oil funds, approximated 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 current 7.5%, but for that to occur, another main policy is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; editing by John Mair, Savio D’Souza, Shri Navaratnam and Barbara Lewis)