Biodiesel allotment decree was awaited by market

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

Palm oil criteria 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 designating 15.6 million kilolitres (KL) of biodiesel for 2025 distribution, while giving the industry up until the end of next month to adjust to the higher level of the fuel in the mix.

Indonesia, the world's biggest exporter of palm oil, had planned to launch the compulsory requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

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

Eniya Listiani Dewi, a ministry senior authorities, said biodiesel manufacturers and fuel retailers will be offered until Feb. 28 to adapt to the B40 mix. She said the delay was due to the fact that of technical challenges linked to subsidies for the fuel.

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

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

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

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

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

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

To help finance that, Indonesia prepares to increase its export levy for unrefined palm oil (CPO) to 10% from the existing 7.5%, however for that to happen, another main policy is required. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; modifying by John Mair, Savio D'Souza, Shri Navaratnam and Barbara Lewis)