Indonesia Signs 15.6 Mln Kilolitres Biodiesel Allocation For 2025

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Biodiesel allowance decree was awaited by market

Biodiesel allotment decree was waited for by industry


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


Palm oil benchmark 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 designating 15.6 million kilolitres (KL) of biodiesel for 2025 circulation, while offering the market up until the end of next month to adapt to the greater level of the fuel in the mix.


Indonesia, the world's biggest exporter of palm oil, had actually prepared to release the obligatory 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 informed press reporters, adding the federal government was working to increase the compulsory biodiesel mix to 50% next year.


Eniya Listiani Dewi, a ministry senior official, said biodiesel producers and fuel merchants will be offered up until Feb. 28 to adapt to the B40 mix. She said the hold-up was due to the fact that of technical obstacles connected to subsidies for the fuel.


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


Fuel sellers and biodiesel manufacturers had stated they were not able to prepare contracts for biodiesel distribution without the decree.


The biodiesel allowance for 2025 showed an increase from 2024's approximated biodiesel intake of 12.98 KL, ministry information showed on Friday.


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


"The remaining allowances will be cost market rate. The non-PSO allowance is set at 8.07 million KL," Bahlil said, adding the fund might not subsidise the price gap between the palm oil and fossil fuels for the total allowance.


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


To assist fund that, Indonesia plans to increase its export levy for crude palm oil (CPO) to 10% from the current 7.5%, however for that to take place, another official guideline is needed. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; editing by John Mair, Savio D'Souza, Shri Navaratnam and Barbara Lewis)

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