mission-biofuels-india-private-ltd

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

Indonesia firmly insists B40 biodiesel application to proceed on Jan. 1

Industry participants looking for phase-in duration expect steady introduction

Industry deals with technical obstacles and expense issues

Government funding concerns develop due to palm oil price variation

JAKARTA, Dec 18 (Reuters) - Indonesia's strategy to broaden its biodiesel required from Jan. 1, which has sustained concerns it could curb global palm oil materials, looks progressively most likely to be carried out gradually, experts said, as industry participants seek a phase-in period.

Indonesia, the world's biggest producer and exporter of palm oil, plans to raise the necessary mix of palm oil in biodiesel to 40% - called B40 - from 35%, a policy that has actually triggered a dive in palm futures and might press costs further in 2025.

While the government of President Prabowo Subianto has actually said consistently the plan is on track for full launch in the brand-new year, market watchers say costs and technical challenges are likely to result in partial implementation before full adoption throughout the stretching archipelago.

Indonesia's greatest fuel retailer, state-owned Pertamina, said it requires to modify a few of its fuel terminals to blend and store B40, which will be completed throughout a "transition period after federal government develops the required", representative Fadjar Djoko Santoso told Reuters, without offering information.

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

Hiswana Migas, the fuel merchants' association, did not immediately react to an ask for remark.

Energy ministry senior main Eniya Listiani Dewi told Reuters the required walking would not be implemented slowly, and that biodiesel producers are prepared to provide the higher mix.

"I have verified the readiness with all producers recently," she said.

APROBI, whose members make fatty acid methyl ester (FAME) from palm oil to be mixed with diesel fuel, said the government has not released allowances for producers to sell to sustain merchants, which it generally has actually done by this time of the year.

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

The federal government plans to assign 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 federal government, funding the greater mix could also be a difficulty as palm oil now costs around $400 per metric lot more than crude oil. Indonesia utilizes proceeds from palm oil export levies, handled by a firm called BPDPKS, to cover such gaps.

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

However, the palm oil industry would object to a levy walking, said Tauhid Ahmad, a senior expert with think-tank INDEF, as it would harm the industry, including palm smallholders.

"I believe there will be a delay, due to the fact that if it is executed, the subsidy will increase. Where will (the money) come from?" he said.

Nagaraj Meda, managing director of Consulting, a product consultancy, said B40 application would be challenging in 2025.

"The application might be sluggish and progressive in 2025 and most likely more hectic in 2026," he stated.

Prabowo, who took workplace in October, campaigned on a platform to raise the mandate even more to B50 or B60 to attain energy self-sufficiency and cut $20 billion of annual fuel imports. ($1 = 16,035.0000 rupiah) (Reporting by Bernadette Christina