Biodiesel allotment decree was waited for by market
Indonesia had planned to release higher biodiesel mix on Jan. 1
Palm oil benchmark contract rose 1% after previous fall
Government goes 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 distribution, while the market up until the end of next month to adjust to the greater level of the fuel in the mix.
Indonesia, the world's largest exporter of palm oil, had 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 told reporters, including the federal government was working to increase the compulsory biodiesel mix to 50% next year.
Eniya Listiani Dewi, a ministry senior official, stated biodiesel manufacturers and fuel merchants will be offered till Feb. 28 to adapt to the B40 mix. She stated the delay was due to the fact that of technical difficulties linked to subsidies for the fuel.
The non-implementation on Jan. 1. had resulted in a 2.6% drop in the Malaysian palm oil standard agreement on Thursday. On Friday, it recovered by around 1%.
Fuel merchants and biodiesel manufacturers had said they were not able to prepare contracts for biodiesel distribution without the decree.
The biodiesel allotment for 2025 suggested a boost from 2024's approximated biodiesel consumption 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 obligation (PSO), which covers sectors such as public transport, whose sales will be subsidised by the nation's palm oil fund.
"The remaining allocations will be cost market price. The non-PSO allocation is set at 8.07 million KL," Bahlil stated, including the fund might not subsidise the price gap between the palm oil and nonrenewable fuel sources for the total allowance.
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 finance that, Indonesia plans to increase its export levy for crude palm oil (CPO) to 10% from the present 7.5%, however for that to occur, another main guideline is required. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati
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Indonesia Signs 15.6 Mln Kilolitres Biodiesel Allocation For 2025
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