Indonesia delays biodiesel blend increase

January 03, 2025 (MLN): Indonesia has yet to implement a higher mandatory blend of biodiesel planned for Jan 01, as Reuters reported.

Industry participants are awaiting technical details of the new regulation, causing confusion among palm oil traders.

The government had pledged to mandate a 40% mix of palm oil-based fuel in biodiesel from Jan 01, known as B40, from a 35% blend currently in force.

The benchmark palm oil contract for March delivery on the bursa Malaysia derivatives exchange closed 2.5% lower on Thursday at 4,336 ringgit ($968.72) a metric ton amid uncertainty about B40 implementation.

This decline followed a rise of about 1.8% earlier in the day when it tracked gains in Dalian vegetable oil.

The plan for a higher biodiesel blend by the world's biggest palm oil producer helped drive up Malaysia's benchmark palm oil contract by nearly 20% in 2024 on expectations of lower palm oil exports from rival producer Indonesia.

As of Thursday, Indonesian state energy firm pertamina, which operates the country's largest petrol station network, and biodiesel producers group APROBI said they were waiting for the relevant official decrees before selling the fuel.

"Once the regulation has been issued, there will be time to transition for the sale.

At the moment we have prepared Plaju and Kasim refineries for processing of B40," Pertamina spokesperson Fadjar Djoko Santoso said.

Members of APROBI cannot draw contracts for biodiesel distribution without a decree from the government, Secretary General Ernest Gunawan said.

Edi Wibowo, director of bioenergy at the energy ministry, said on Thursday that he was awaiting further instructions for B40, without providing more details.

Other senior officials at the energy ministry did not respond to queries about B40 implementation.

Palm oil industry watchers had expected the rollout of the policy to be gradual.

Meanwhile, palm oil traders are waiting for the official volume of biodiesel that Indonesia will allocate to fuel retailers to gauge how much exports will be affected.

Indonesian officials have previously said the country plans to allocate 15.62 million kilolitres (4.13 billion gallons) of palm oil-based fuel for B40 in 2025.

Analysts are concerned about plans to only subsidize B40 for non-industrial use, which represents less than half of the country's demand.

"There are hurdles for the bullish sentiment as (market) participants are still not convinced over the fate of the Indonesian B40 biodiesel policy success," said Anilkumar Bagani, head of research at Mumbai-based vegetable oil broker Sunvin Group.

Copyright Mettis Link News