This newsreport by Reuters appeared in Business Times pullout today.
MALAYSIA's petroleum companies are expected to bear the extra cost of selling diesel blended with palm methyl ester from June 2010 to kick-start sales of the green fuel, after a four-year delay.
MALAYSIA's petroleum companies are expected to bear the extra cost of selling diesel blended with palm methyl ester from June 2010 to kick-start sales of the green fuel, after a four-year delay.
The world's No. 2 palm oil producer has struggled to implement a mandate to push the blended fuel and support the palm oil industry that was first introduced in 2007 as the government was reluctant to subsidise biofuel blends to match diesel prices at the pump.
Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said yesterday that B5, a blend of 5 per cent palm methyl ester and 95 per cent regular diesel, will be introduced in stages, starting from Selangor, Kuala Lumpur, Putrajaya, southern Perak, western Pahang, Negeri Sembilan, Melaka and northern Johor.
"B5 will support palm oil prices and enable planters, especially the smallholders, to reap economic benefits," Dompok told reporters after the launch of the Sime Darby Group biodiesel fuel, Bio-N (pronounced Beyond), at the company's biodiesel plant in Pulau Carey, Selangor. Eventually, B5 will be extended to other states and take up 500,000 tonnes of the country's total annual crude palm oil production.
Traders said the announcement briefly supported Malaysian crude palm oil futures before market players turned their focus to lower crude oil and soyaoil markets. "The government has been flip-flopping over this issue. It gives a good support base for the market, but it remains to be seen if it will actually be implemented," a trader with a local brokerage said.
Dompok said the government will bear the cost of developing six petroleum depots with blending facilities at a cost of RM43.1 million. In turn, oil companies like Petronas, Shell, ExxonMobil and Caltex, will have to subsidise palm-based biofuel blends at the pump, he said.
Petroleum diesel retails at RM1.70 a litre, a price regulated by the government and among the lowest in Asia. Any increase in petroleum prices is politically sensitive. Local biofuel manufacturers say blending 5 per cent palm methyl ester into diesel increased prices by between 2 and 6 sen a litre over petroleum diesel.
Dompok said Malaysia has approved 56 licences for biofuel production, for a total capacity of 6.8 million tonnes. Last year, the country produced 227,457 tonnes of palm-based biofuels that garnered export earnings of about RM606 million. - Reuters
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