Indonesia Signs 15.6 Mln Kilolitres Biodiesel Allocation For 2025

Biodiesel allotment decree was waited for by industry

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

Palm oil criteria agreement increased 1% after previous fall

Government aims 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 allocating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while giving the market until the end of next month to adjust to the greater level of the fuel in the mix.

Indonesia, the world’s biggest exporter of palm oil, had actually prepared to launch the mandatory 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 told press reporters, adding the federal government was working to increase the compulsory biodiesel mix to 50% next year.

Eniya Listiani Dewi, a senior official, stated biodiesel producers and fuel merchants will be given up until Feb. 28 to adjust to the B40 mix. She stated the delay was since 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 agreement on Thursday. On Friday, it recovered by around 1%.

Fuel sellers and biodiesel producers had stated they were unable to prepare agreements for biodiesel distribution without the decree.

The biodiesel allowance for 2025 suggested a boost from 2024’s approximated biodiesel consumption of 12.98 KL, ministry information revealed on Friday.

Of the total allocation 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 country’s palm oil fund.

“The staying allotments will be sold at market rate. The non-PSO allowance is set at 8.07 million KL,” Bahlil stated, adding the fund might not subsidise the rate gap between the palm oil and fossil fuels for the total allotment.

BPDPKS, the company in charge of gathering and handling the palm oil funds, approximated in November B40 would need a 68% subsidy increase.

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