JAKARTA: Indonesia has yet to implement a higher mandatory blend of biodiesel planned for Jan. 1 as industry participants await the technical regulations for the rollout, causing confusion among palm oil traders.
The government had pledged to mandate a 40% mix of palm oil-based fuel in biodiesel from Jan. 1, known as B40, up from the current 35% blend.
The plan for a higher biodiesel blend by the world's largest palm oil producer helped send the benchmark palm oil contract in Malaysia nearly 20% higher in 2024 due to expectations of reduced Indonesian palm oil exports.
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 still awaiting 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 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 noted.
Edi Wibowo, director of bioenergy at the energy ministry, stated on Thursday that he was awaiting further instructions for B40 but did not provide additional details. Other senior officials at the energy ministry did not respond to queries about B40 implementation.
Palm oil industry watchers had expected the policy rollout to be gradual.
Meanwhile, palm oil traders are waiting for the official volume of biodiesel that Indonesia will allocate to fuel retailers to gauge the potential impact on exports. 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 also 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 sentiments as the 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. — Reuters
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