Indonesia’s Higher Biodiesel Mandate Rollout May Be Gradual,

Indonesia firmly insists B40 biodiesel application to proceed on Jan. 1

Industry individuals seeking phase-in period anticipate gradual intro

Industry faces technical obstacles and cost concerns

Government financing concerns occur due to palm oil rate disparity

JAKARTA, Dec 18 (Reuters) – Indonesia’s plan to expand its biodiesel required from Jan. 1, which has sustained concerns it might curb global palm oil supplies, looks progressively most likely to be carried out slowly, experts said, as market participants look for a phase-in duration.

Indonesia, the world’s biggest manufacturer and exporter of palm oil, prepares to raise the compulsory mix of palm oil in biodiesel to 40% – called B40 – from 35%, a policy that has activated a jump in palm futures and may pressure prices further in 2025.

While the government of President Prabowo Subianto has actually stated consistently the strategy is on track for complete launch in the brand-new year, market watchers state expenses and technical obstacles are most likely to lead to partial execution before full adoption across the stretching island chain.

fuel retailer, state-owned Pertamina, said it needs to modify some of its fuel terminals to blend and keep B40, which will be finished throughout a “transition duration after federal government establishes the required”, spokesperson Fadjar Djoko Santoso told Reuters, without offering information.

During a meeting with federal government authorities and biodiesel producers last week, fuel merchants requested a two-month shift period, Ernest Gunawan, secretary general of biofuel manufacturers association APROBI, who remained in presence, told Reuters.

Hiswana Migas, the fuel sellers’ association, did not immediately react to an ask for comment.

Energy ministry senior main Eniya Listiani Dewi informed Reuters the required walking would not be carried out slowly, and that biodiesel manufacturers are ready to provide the higher mix.

“I have actually confirmed the preparedness with all manufacturers last week,” she stated.

APROBI, whose members make fat methyl ester (FAME) from palm oil to be blended with diesel fuel, said the federal government has not provided allotments for manufacturers to sell to sustain sellers, which it usually has done by this time of the year.

“We can’t perform without purchase order documents, and order documents are gotten after we get contracts with fuel business,” Gunawan informed Reuters. “Fuel companies can just sign agreements after the ministerial decree (on biodiesel allocations).”

The government plans to allocate 15.62 million kilolitres (4.13 billion gallons) of FAME for B40 in 2025, Eniya told Reuters, less than its initial quote of 16 million kilolitres.

FUNDING CHALLENGES

For the federal government, funding the greater blend might likewise be a challenge as palm oil now costs around $400 per metric load more than crude oil. Indonesia utilizes earnings from palm oil export levies, handled by an agency called BPDPKS, to cover such gaps.

In November, BPDPKS estimated it needed a 68% boost in subsidies to 47 trillion rupiah ($2.93 billion) next year and estimated levy collection at around 21 trillion rupiah, fuelling market speculation that a levy walking is imminent.

However, the palm oil market would challenge a levy hike, stated Tauhid Ahmad, a senior expert with think-tank INDEF, as it would harm the market, including palm smallholders.

“I think there will be a hold-up, due to the fact that if it is carried out, the aid will increase. Where will (the cash) originate from?” he said.

Nagaraj Meda, handling director of Transgraph Consulting, a commodity consultancy, stated B40 implementation would be challenging in 2025.

“The execution might be slow and gradual in 2025 and most likely more busy in 2026,” he stated.

Prabowo, who took workplace in October, campaigned on a platform to raise the required even more to B50 or B60 to achieve energy self-sufficiency and cut $20 billion of yearly fuel imports. ($1 = 16,035.0000 rupiah) (Reporting by Bernadette Christina; Editing by Tony Munroe and Lincoln Feast.)