mission-newenergy-limited

1 Indonesia's Higher Biodiesel Mandate Rollout May Be Gradual,

Indonesia insists B40 biodiesel application to proceed on Jan. 1

Industry individuals looking for phase-in period expect gradual intro

Industry deals with technical challenges and cost concerns

Government funding problems occur due to palm oil price variation

JAKARTA, Dec 18 (Reuters) - Indonesia's strategy to broaden its biodiesel mandate from Jan. 1, which has actually fuelled concerns it might suppress worldwide palm oil products, looks significantly most likely to be implemented slowly, experts stated, as industry individuals look for a phase-in period.

Indonesia, the world's biggest producer and exporter of palm oil, prepares to raise the obligatory mix of palm oil in biodiesel to 40% - called B40 - from 35%, a policy that has set off a dive in palm futures and may pressure prices further in 2025.

While the federal government of President Prabowo Subianto has actually said consistently the strategy is on track for complete launch in the brand-new year, industry watchers state costs and technical challenges are most likely to result in partial execution before full adoption across the stretching island chain.

Indonesia's most significant fuel seller, state-owned Pertamina, said it requires to modify some of its fuel terminals to blend and keep B40, which will be completed throughout a "shift duration after government develops the required", representative Fadjar Djoko Santoso informed Reuters, without offering details.

During a conference with federal government authorities and biodiesel manufacturers last week, fuel retailers requested a two-month transition duration, Ernest Gunawan, secretary general of biofuel manufacturers association APROBI, who remained in participation, informed 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 required hike would not be carried out gradually, and that biodiesel manufacturers are ready to supply the greater mix.

"I have confirmed the preparedness with all producers last week," she said.

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

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

The federal government prepares 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 government, funding the higher blend might also be an obstacle as palm oil now costs around $400 per metric load more than petroleum. Indonesia utilizes proceeds from palm oil export levies, managed by an agency called BPDPKS, to cover such spaces.

In November, BPDPKS approximated it required a 68% boost in subsidies to 47 trillion rupiah ($2.93 billion) next year and approximated levy collection at around 21 trillion rupiah, fuelling market speculation that a levy hike impends.

However, the palm oil industry would object to 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 hold-up, due to the fact that if it is executed, the subsidy will increase. Where will (the cash) come from?" he said.

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

"The execution might be sluggish and steady in 2025 and most likely more fast-paced in 2026," he said.

Prabowo, who took workplace in October, campaigned on a platform to raise the required even more 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