Indonesia Signs 15.6 Mln Kilolitres Biodiesel Allocation For 2025

Biodiesel allowance decree was awaited by market

Indonesia had prepared to introduce higher biodiesel mix on Jan. 1

Palm oil criteria agreement rose 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 assigning 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 prepared to introduce the necessary requirement of 40% palm oil fuel in biodiesel on Jan. 1, up from 35% now.

«The ministerial policy has actually been signed,» the minister Bahlil Lahadalia told reporters, adding the government was working to increase the mandatory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a ministry senior official, said biodiesel producers and fuel sellers will be provided up until Feb. 28 to adjust to the B40 mix. She stated the hold-up was due to the fact that of technical challenges connected to aids for the fuel.

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

Fuel retailers and biodiesel producers had actually stated they were not able to draw up contracts for biodiesel circulation without the decree.

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

Of the total allocation for this year, 7.55 million KL is for the general public service obligation (PSO), which covers sectors such as mass transit, whose sales will be subsidised by the oil fund.

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

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

To help 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 needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; editing by John Mair, Savio D’Souza, Shri Navaratnam and Barbara Lewis)