Indonesia Signs 15.6 Mln Kilolitres Biodiesel Allocation For 2025

Biodiesel allotment decree was waited for by industry

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

Palm oil benchmark agreement rose 1% after previous fall

Government intends 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 15.6 million kilolitres (KL) of biodiesel for 2025 distribution, while giving the market until completion of next month to adapt to the greater level of the fuel in the mix.

Indonesia, the world’s largest exporter of palm oil, had actually prepared to introduce the necessary 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 federal government was working to increase the necessary biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior authorities, said biodiesel producers and fuel retailers will be offered till Feb. 28 to adjust to the B40 mix. She said the hold-up was because of technical difficulties connected to subsidies for the fuel.

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

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

The biodiesel allowance for 2025 indicated a boost from 2024’s estimated biodiesel intake of 12.98 KL, ministry information showed on Friday.

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

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

BPDPKS, the company in charge of collecting and handling the palm oil funds, estimated in November B40 would require a 68% subsidy boost.

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