InfoSAWIT, JAKARTA – Indonesia has yet to implement the mandatory 40% biodiesel blend, or B40, which was scheduled to take effect on January 1, 2025. This uncertainty regarding technical regulations has created confusion among traders and palm oil industry players.
The government had previously committed to increasing the palm oil-based biodiesel blend from 35% to 40% as part of efforts to reduce fossil fuel imports and utilize domestic palm oil. This initiative was expected to commence at the beginning of 2025.
PT Pertamina, which manages the largest gas station network in Indonesia, along with the Indonesian Biofuel Producers Association (APROBI), stated they are still awaiting official regulations before they can begin distributing B40 fuel.
"Once the regulations are issued, there will be a transition period for sales. We have prepared the Plaju and Kasim refineries for B40 production," said Fadjar Djoko Santoso, Pertamina's spokesperson, as reported by InfoSAWIT from Reuters on Friday, January 3, 2025.
However, APROBI's Secretary-General, Ernest Gunawan, stated that without an official decision from the government, association members cannot sign biodiesel distribution contracts. Edi Wibowo, the Director of Bioenergy at the Ministry of Energy and Mineral Resources (ESDM), mentioned that they are still waiting for further instructions regarding the policy. So far, there has been no detailed information regarding the implementation of B40 from senior ministry officials.
The planned implementation of B40 has triggered a nearly 20% surge in benchmark palm oil prices in Malaysia throughout 2024, due to expectations of reduced palm oil exports from Indonesia. However, market players are now facing uncertainty regarding the allocation of biodiesel for fuel retailers.
Indonesia had previously announced it would allocate 15.62 million kiloliters (4.13 billion gallons) of palm oil-based fuel for the B40 program in 2025. However, concerns have arisen regarding subsidies that only cover non-industrial use, which represents less than half of the total domestic demand.
"There are obstacles to positive sentiment in the market as players remain doubtful about the successful implementation of the B40 policy," said Anilkumar Bagani, head of research at Sunvin Group, a Mumbai-based vegetable oil brokerage.
Observers predict that the B40 policy will be implemented gradually, given the complexities of the process and technical challenges on the ground. Until now, the palm oil and biodiesel industries continue to await regulatory certainty to move forward. (T2)
