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Opened Jan 16, 2025 by Carma Hostetler@carma09q32084
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Indonesia's Higher Biodiesel Mandate Rollout May Be Gradual,


Indonesia insists B40 biodiesel application to continue on Jan. 1

Industry participants seeking phase-in duration anticipate gradual intro

Industry deals with technical obstacles and expense concerns

Government financing problems arise due to palm oil rate disparity

JAKARTA, Dec 18 (Reuters) - Indonesia's plan to broaden its biodiesel mandate from Jan. 1, which has sustained concerns it might suppress international palm oil materials, looks increasingly most likely to be implemented slowly, experts said, as market individuals seek a phase-in period.

Indonesia, the world's biggest producer 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 actually activated a dive in palm futures and may push rates even more in 2025.

While the government of President Prabowo Subianto has said consistently the plan is on track for complete launch in the brand-new year, industry watchers state costs and technical obstacles are likely to result in partial execution before full adoption across the sprawling archipelago.

Indonesia's greatest fuel merchant, state-owned Pertamina, stated it needs to customize a few of its fuel terminals to mix and keep B40, which will be completed during a "transition duration after federal government establishes the mandate", spokesperson Fadjar Djoko Santoso informed Reuters, without supplying details.

During a conference with government officials and producers recently, fuel merchants requested a two-month shift period, Ernest Gunawan, secretary general of biofuel producers association APROBI, who remained in attendance, told Reuters.

Hiswana Migas, the fuel merchants' association, did not immediately react to a request for comment.

Energy ministry senior official Eniya Listiani Dewi told Reuters the mandate hike would not be carried out gradually, and that biodiesel manufacturers are prepared to provide the greater blend.

"I have verified the preparedness with all manufacturers recently," she stated.

APROBI, whose members make fatty acid methyl ester (FAME) from palm oil to be blended with diesel fuel, stated the federal government has not provided allocations for producers to offer to fuel sellers, which it usually has actually done by this time of the year.

"We can't perform without order files, and purchase order files are gotten after we get contracts with fuel business," Gunawan told Reuters. "Fuel business can only sign contracts after the ministerial decree (on biodiesel allowances)."

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 preliminary price quote of 16 million kilolitres.

FUNDING CHALLENGES

For the government, funding the greater mix might also be a difficulty as palm oil now costs around $400 per metric lot more than petroleum. Indonesia utilizes profits from palm oil export levies, managed 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 hike looms.

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

"I think there will be a delay, because if it is carried out, the aid will increase. Where will (the money) come from?" he said.

Nagaraj Meda, managing director of Transgraph Consulting, a product consultancy, stated B40 execution would be challenging in 2025.

"The implementation may be sluggish and progressive in 2025 and probably more busy in 2026," he stated.

Prabowo, who took workplace in October, campaigned on a platform to raise the mandate further to B50 or B60 to accomplish 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.)

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Reference: carma09q32084/mission-biotechnologies-sdn.-bhd#10