mission-newenergy-limited

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

Indonesia firmly insists B40 biodiesel implementation to continue on Jan. 1

Industry individuals seeking phase-in duration expect progressive introduction

Industry faces technical obstacles and cost concerns

Government financing problems arise due to palm oil cost disparity

JAKARTA, Dec 18 (Reuters) - Indonesia's plan to expand its biodiesel required from Jan. 1, which has sustained issues it could curb international palm oil materials, looks progressively likely to be implemented slowly, experts stated, as market participants look for a phase-in duration.

Indonesia, the world's greatest 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 triggered a jump in palm futures and might push costs even more in 2025.

While the government of President Prabowo Subianto has said consistently the strategy is on track for complete launch in the brand-new year, industry watchers say costs and technical difficulties are likely to lead to partial application before full adoption across the sprawling archipelago.

Indonesia's most significant fuel retailer, state-owned Pertamina, said it needs to customize some of its fuel terminals to blend and save B40, which will be finished throughout a "transition period after government develops the required", representative Fadjar Djoko Santoso told Reuters, without offering information.

During a meeting with federal government officials and biodiesel manufacturers recently, fuel retailers requested a two-month shift duration, Ernest Gunawan, secretary general of biofuel manufacturers association APROBI, who was in presence, informed Reuters.

Hiswana Migas, the fuel merchants' association, did not right away respond to an ask for remark.

Energy ministry senior main Eniya Listiani Dewi informed Reuters the mandate hike would not be carried out gradually, and that biodiesel manufacturers are all set to supply the greater blend.

"I have actually verified the preparedness with all producers last week," she stated.

APROBI, whose members make fat methyl ester (FAME) from palm oil to be blended with diesel fuel, said the federal government has actually not released allowances for producers to offer to sustain retailers, which it normally has done by this time of the year.

"We can't provide the products without purchase order documents, and purchase order files are acquired after we get agreements with fuel companies," Gunawan told Reuters. "Fuel companies can just sign agreements after the ministerial decree (on biodiesel allocations)."

The government prepares to assign 15.62 million kilolitres (4.13 billion gallons) of FAME for B40 in 2025, Eniya told Reuters, less than its preliminary estimate of 16 million kilolitres.

FUNDING CHALLENGES

For the government, moneying the greater mix might also be an obstacle as palm oil now costs around $400 per metric heap more than petroleum. Indonesia uses earnings from palm oil export levies, managed by a company called BPDPKS, to cover such gaps.

In November, BPDPKS estimated it needed a 68% increase in subsidies to 47 trillion rupiah ($2.93 billion) next year and approximated levy collection at around 21 trillion rupiah, sustaining market that a levy walking is impending.

However, the palm oil market would object to a levy hike, stated Tauhid Ahmad, a senior analyst with think-tank INDEF, as it would injure the industry, consisting of palm smallholders.

"I think there will be a delay, since if it is executed, the aid will increase. Where will (the cash) come from?" he stated.

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

"The implementation may be sluggish and gradual 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 further to B50 or B60 to achieve energy self-sufficiency and cut $20 billion of yearly fuel imports. ($1 = 16,035.0000 rupiah) (Reporting by Bernadette Christina