Indonesia Signs 15.6 Mln Kilolitres Biodiesel Allocation For 2025

Biodiesel allotment decree was waited for by market

Indonesia had actually planned to release higher biodiesel mix on Jan. 1

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

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

Eniya Listiani Dewi, a ministry senior authorities, said biodiesel manufacturers and fuel retailers will be offered up until Feb. 28 to adjust to the B40 mix. She stated the delay was because of technical challenges connected to subsidies for the fuel.

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

Fuel retailers and biodiesel producers had actually stated they were unable to draw up agreements for biodiesel distribution without the decree.

The biodiesel allocation for 2025 suggested an increase from 2024’s approximated biodiesel consumption of 12.98 KL, ministry data showed on Friday.

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

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

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