Indonesia is preparing to roll out its B50 biodiesel mandate from July 1, following positive fuel test results, Energy Minister Bahlil Lahadalia said on Thursday.
Under the programme, diesel fuel will consist of a 50% blend of palm oil-based biodiesel and 50% conventional diesel, replacing the current B40 mandate, Reuters reported.
Indonesia revived plans in March to increase the biodiesel blend ratio after oil supply disruptions linked to the U.S. and Israel attacks on Iran raised concerns over energy security.
Bahlil said testing conducted by the energy ministry had delivered encouraging results and confirmed that implementation of B50 would begin as scheduled.
He added that the higher blending requirement is expected to reduce, or potentially eliminate, imports of diesel fuel, particularly cetane 48 gasoil.
According to the energy ministry, the combined implementation of B40 during the first half of 2026 and B50 during the second half is projected to generate import savings of around 157.28 trillion rupiah (about $8.89 billion). This compares with estimated savings of 139.8 trillion rupiah if the B40 mandate had remained in place for the entire year.
Earlier concerns over financing had delayed the B50 plan. However, ministry officials now expect subsidy requirements to be lower than initially projected following the recent rise in crude oil prices.
Eniya Listiani Dewi, Director General of Renewable Energy at the energy ministry, said biodiesel subsidies for 2026 are now estimated at 32 trillion rupiah, lower than the earlier projection of 47 trillion rupiah.
Indonesia supports its biodiesel programme through subsidies funded by a levy collected on palm oil exports. The mechanism is designed to bridge the price difference between conventional diesel and palm oil-based biodiesel.
Although palm oil generally trades at a premium to gasoil, higher crude oil prices linked to the Middle East conflict have narrowed the gap and improved the competitiveness of palm-based fuel.
Data presented during a recent parliamentary hearing showed that Indonesia’s plantation fund agency BPDP, which manages the palm oil export levy, collected 17.4 trillion rupiah between January and May, achieving 64% of its full-year target of 26.84 trillion rupiah.
The energy ministry is now preparing regulations to support implementation of B50, including additional biodiesel quotas needed to meet demand.
At a parliamentary hearing earlier this month, Eniya said demand for palm-based biodiesel in 2026 could rise to 17.6 million kilolitres to support the B50 mandate in the second half of the year, compared with the earlier allocation of 15.65 million kilolitres.
($1 = 17,700 rupiah)
