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

Indonesia insists B40 biodiesel execution to continue on Jan. 1

Industry individuals looking for phase-in duration expect progressive intro

Industry deals with technical difficulties and expense concerns

Government financing problems arise due to palm oil price variation

JAKARTA, Dec 18 (Reuters) - Indonesia's plan to broaden its biodiesel mandate from Jan. 1, which has actually fuelled concerns it could suppress global palm oil materials, looks progressively most likely to be implemented gradually, analysts stated, as market individuals look for a phase-in period.

Indonesia, the world's greatest producer and exporter of palm oil, prepares to raise the necessary mix of palm oil in biodiesel to 40% - called B40 - from 35%, a policy that has set off a dive in palm futures and may pressure costs even more in 2025.

While the government of President Prabowo Subianto has actually stated repeatedly the strategy is on track for complete launch in the new year, market watchers say expenses and technical obstacles are most likely to lead to partial implementation before full adoption across the stretching archipelago.

Indonesia's biggest fuel seller, state-owned Pertamina, said it needs to modify a few of its fuel terminals to blend and store B40, which will be finished throughout a "transition duration after federal government develops the mandate", representative Fadjar Djoko Santoso told Reuters, without supplying information.

During a conference with federal government officials and biodiesel producers recently, fuel merchants requested a two-month transition duration, Ernest Gunawan, secretary general of biofuel manufacturers association APROBI, who remained in presence, informed Reuters.

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

Energy ministry senior official Eniya Listiani Dewi informed Reuters the mandate walking would not be executed gradually, which biodiesel producers are all set to supply the greater mix.

"I have confirmed the readiness with all manufacturers last week," she said.

APROBI, whose members make fat methyl ester (FAME) from palm oil to be combined with diesel fuel, said the government has not released allotments for manufacturers to offer to fuel retailers, which it usually has done by this time of the year.

"We can't deliver the goods without order documents, and order files are gotten after we get agreements with fuel companies," Gunawan informed Reuters. "Fuel companies can only sign agreements after the ministerial decree (on biodiesel allowances)."

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

FUNDING CHALLENGES

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

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

However, the market would object to a levy walking, stated Tauhid Ahmad, a senior analyst with think-tank INDEF, as it would injure the market, including palm smallholders.

"I think there will be a hold-up, because if it is implemented, the subsidy will increase. Where will (the money) originate from?" he stated.

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

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