Malaysia to defer biodiesel blend scheme to next year - sources

01 February 2010 09:42  [Source: ICIS news]

SINGAPORE (ICIS news)--Malaysia plans to defer the full implementation of its biodiesel blend programme to next year because of the high costs the government will have to incur, market sources said on Monday.

The deferment came about as the government had difficulty in finding a willing party to pass off the extra cost - total amount has not been revealed yet - arising from the biodiesel blend, a producer said.

Sources said the government was yet to decide on whether to pass on the extra costs to consumers, petroleum companies or to absorb it as subsidy.

The government had originally planned to introduce the mandatory B5 biodiesel mandate in early January this year but was unsuccessful due to rising costs, a trader said.

Malaysia is currently the world’s No 2 palm oil producer and the B5 biodiesel mandate is expected to utilise 500,000 tonnes of palm oil per month, the producer said.

A total of 91 companies have been granted licenses to operate plants in Malaysia, while only seven are currently operating – Lereno, Cognis, Carotino, Global Biodiesel, Carotech, Mission NewEnergy and Vance Bioenergy.

However, only Vance Bioenergy, Mission NewEnergy and Carotech are active producers and each of the companies was running its facility at below 10% of nameplate capacity because of weak demand in the current production lull period, sources said.

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By: Serena Seng

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