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 providing the market until the end of next month to adjust to the higher level of the fuel in the mix.
Indonesia, the world’s biggest exporter of palm oil, had actually planned to launch the mandatory 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 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 producers and fuel merchants will be provided until Feb. 28 to adapt to the B40 mix. She stated the hold-up was because of technical obstacles connected to aids for the fuel.
The non-implementation on Jan. 1. had actually resulted in a 2.6% drop in the Malaysian palm oil standard contract on Thursday. On Friday, it recovered by around 1%.
Fuel retailers and biodieselproducers had said they were unable to draw up agreements for biodiesel circulation without the decree.
The biodieselallowance for 2025 a boost from 2024’s estimated biodiesel usage of 12.98 KL, ministry information revealed on Friday.
Of the overall allowance for this year, 7.55 million KL is for the public service obligation (PSO), which covers sectors such as mass transit, whose sales will be subsidised by the nation’s palm oil fund.
“The staying allocations will be cost market price. The non-PSO allowance is set at 8.07 million KL,” Bahlil stated, adding the fund might not subsidise the cost gap between the palm oil and fossil fuels for the overall allotment.
BPDPKS, the agency in charge of gathering and managing the palm oil funds, estimated in November B40 would need a 68% subsidy increase.
To help finance that, Indonesia prepares to increase its export levy for crude palm oil (CPO) to 10% from the existing 7.5%, however for that to happen, another official regulation is required. (Reporting by Bernadette Christina Munthe, Fransiska Nangoy, Dewi Kurniawati; editing by John Mair, Savio D’Souza, Shri Navaratnam and Barbara Lewis)
