Indonesian Palm Oil Makers Await Technical Details for Latest Biodiesel Mandate

Indonesia’s implementation of its planned B40 biodiesel mandate, which would increase the palm oil-based blend in biodiesel from 35% to 40%, has yet to take effect as industry stakeholders await technical details and official decrees. This delay has caused significant uncertainty in the palm oil market, impacting trade sentiment and pricing.

The government’s initial announcement of the B40 mandate had boosted palm oil prices in 2024, with Malaysia’s benchmark palm oil contract surging nearly 20% on expectations of reduced exports from Indonesia, the world's largest palm oil producer. However, the lack of clarity surrounding the rollout timeline has reversed this trend, with the benchmark contract for March delivery on the Bursa Malaysia Derivatives Exchange dropping 2.5% on Thursday to 4,336 ringgit ($968.72) per metric ton.

State energy company Pertamina and the biodiesel producers group APROBI have stated that they cannot proceed with production or contracts until official regulations are issued. Pertamina spokesperson Fadjar Djoko Santoso noted that the company’s refineries in Plaju and Kasim are prepared for B40 processing but require additional time for transitioning once the decree is issued. Similarly, APROBI Secretary General Ernest Gunawan emphasized that contracts for biodiesel distribution are contingent on government directives.

The energy ministry has offered little clarity, with Director of Bioenergy Edi Wibowo indicating that further instructions are awaited, while other senior officials have not commented. Analysts suggest that a gradual implementation of the B40 policy was expected, but the lack of specifics has left market participants skeptical about its immediate impact.