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

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

Industry individuals looking for phase-in duration anticipate progressive intro

Industry deals with technical obstacles and expense issues

Government financing issues occur due to palm oil rate variation

JAKARTA, Dec 18 (Reuters) - Indonesia's plan to broaden its biodiesel mandate from Jan. 1, which has actually sustained issues it could suppress worldwide palm oil products, looks progressively likely to be carried out gradually, analysts said, as market individuals look for a phase-in period.

Indonesia, the world's most significant manufacturer and exporter of palm oil, plans to raise the mandatory mix of palm oil in biodiesel to 40% - called B40 - from 35%, a policy that has set off a jump in palm futures and may push prices further in 2025.

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

Indonesia's biggest fuel seller, state-owned Pertamina, said it requires to customize a few of its fuel terminals to blend and keep B40, which will be completed throughout a "transition duration after federal government develops the mandate", representative Fadjar Djoko Santoso told Reuters, without providing details.

During a conference with government officials and biodiesel manufacturers last week, fuel sellers asked for a two-month shift duration, Ernest Gunawan, secretary general of biofuel producers association APROBI, who was in participation, told Reuters.

Hiswana Migas, the fuel sellers' association, did not instantly respond to an ask for comment.

Energy ministry senior official Eniya Listiani Dewi told Reuters the mandate walking would not be implemented slowly, which biodiesel producers are ready to provide the higher mix.

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

APROBI, whose members make fatty acid methyl ester (FAME) from palm oil to be mixed with diesel fuel, said the government has not issued allotments for manufacturers to sell to sustain sellers, which it normally has done by this time of the year.

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

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 government, funding the higher mix might also be an obstacle as palm oil now costs around $400 per metric load more than crude oil. Indonesia utilizes proceeds from palm oil export levies, handled by a firm called BPDPKS, to cover such spaces.

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

However, the palm oil industry would challenge a levy walking, said Tauhid Ahmad, a senior expert with think-tank INDEF, as it would hurt the market, consisting of palm smallholders.

"I believe there will be a delay, since if it is executed, the subsidy will increase. Where will (the cash) originate 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 probably more hectic in 2026," he said.

Prabowo, who took office in October, campaigned on a platform to raise the required 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