Malaysia may reduce proposed B5 biodiesel blend - sources

11 January 2010 09:07  [Source: ICIS news]

SINGAPORE (ICIS news)--Malaysia’s Plantation Industries and Commodities Minister Tan Sri Bernard Dompok is likely to propose to the government a reduction in the originally-planned B5 biodiesel blend in the country, market sources said on Monday.

The proposal is expected to be made during a cabinet meeting to be chaired by Prime Minister Najib Tun Razak on Tuesday, sources said.

The current B5 biodiesel blend - 5% palm oil and 95% diesel - is expected to cost the Malaysian government about Malaysia Ringgits (MYR) 250m ($74m) a year to blend the two and distribute it to petrol stations across the country.

A reduction of the B5 biodiesel blend would result in cost savings for the government, especially since feedstock crude palm oil (CPO) values had also been steadily increasing year on year from MYR2,000/tonne in January 2009 to current values of MYR2,650/tonne last assessed on 7 January 2010, a key Malaysian producer said.

On the other hand, a reduction of the biodiesel blend would mean lower usage of palm-based biodiesel which would impact the output plans of domestic biodiesel producers, the Malaysian producer added.

There are 12 active biodiesel plants in Malaysia - four each in Pasir Gudang and Selangor and two each in Perak and Sabah - with a combined capacity of 1.5m tonnes/year.

($1 = MYR3.38)

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By: Serena Seng

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