Indonesia proclaims B40 biodiesel transition period

January 03, 2025 (MLN): Indonesian companies will get a 1-1/2 month transition period to meet the new B40 biodiesel requirement, as Reuters reported.

This was announced by Deputy Energy and Mineral Resources Minister Yuliot Tanjung to reporters on Friday.

Indonesia had planned to launch the mandatory mix of 40% palm oil fuel in biodiesel on Jan 01, but industry players said they are still waiting for the technical regulations.

The world's largest exporter of palm oil currently imposes a mandatory biodiesel mix of 35%.

The transition period started on Jan 01, Yuliot said.

Market participants are waiting for the official decree detailing the volume of biodiesel that Indonesia will allocate to fuel retailers to gauge how much palm oil exports will be affected.

Meanwhile, fuel retailers and biodiesel producers have said they are not able to draw contracts for biodiesel distribution without the decree.

Yuliot declined to say when the decree will be released, adding that such details will be announced by the energy minister "hopefully soon".

Dadan Kusdiana, secretary general at the ministry, said the approval process for the biodiesel allocation is currently in the final stage.

Yuliot reiterated the government's plan to allocate 15.6 million kilolitres of biodiesel this year.

The delay caused the Malaysian palm oil benchmark contract to drop 2.6% on Thursday.

On Friday, it rebounded by around 1.1% as of 0734 GMT.

The deputy minister's comment signaled to the market that Indonesia remains committed to the B40 plan after the confusion over the non-implementation on Jan 01.

"However, while this offers some temporary relief showing the government's firm commitment to biodiesel mandate goals, it does not fully eliminate the uncertainties surrounding the mandate's implementation," said Darren Lim, commodities strategist at Singapore-based broker Phillip Nova.

"The core concerns of regulatory framework, funding, and logistical challenges remain on the minds of many, which could continue to weigh on market sentiment," he added.

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