KUALA LUMPUR: The government has confirmed that it will implement its B7 biodiesel mandate — which involves blending 7% of palm oil methyl ester with 93% of petroleum diesel — in stages beginning Nov 1.
Plantation Industries and Commodities Minister Datuk Amar Douglas Uggah Embas said the B7 programme will be implemented in Peninsular Malaysia on Saturday, and in Sabah and Sarawak, and Labuan by December.
“It only takes about a month for companies to adjust their blending facilities,” he told reporters after opening the Malaysian Palm Oil Council’s (MPOC) International Palm Oil Trade Fair and Seminar 2014 in Kuala Lumpur yesterday.
“It (the B7 programme) is part of the government’s [crude palm oil] stock management programme and we are now studying the possibility of moving higher to B10,” he said.
Peninsular Malaysia has completed its B5 mandate, with Sabah, Sarawak and Labuan close to completion.
Under the government’s B5 programme, 5% of palm oil methyl ester will be added to diesel. Under the B7 programme, the percentage of palm oil will be raised to 7%.
Uggah said some blending facilities and plants in Sabah and Sarawak are still having minor problems.
There are a total of 15 facilities in Sabah and Sarawak, with about three plants under construction.
Uggah said he had instructed the Malaysian Palm Oil Board to ensure the plants in Sabah and Sarawak are completed by the end of November.
He said the implementation of the B7 programme will see a consumption of 575,000 tonnes of biodiesel, contributing to savings of 667.6 million litres of diesel a year.
The minister hopes that the B7 programme will further boost crude palm oil (CPO) prices.
The government’s decision to implement a zero-rate export duty on CPO in September has contributed to higher CPO prices after the value of the commodity had been on a downward trend for six months, reaching a five-year low of RM1,933.50 per tonne in September.
Prime Minister Datuk Seri Najib Razak announced in his Budget 2015 speech that the exemption of export duty on CPO will be extended to the end of this year.
Uggah declined to say if the government plans to extend the tax exemption into 2015.
“I am confident prices will move higher,” he said. CPO is currently trading at RM2,180 per tonne.
Meanwhile, Bernama reported MPOC chief executive officer Tan Sri Yusof Basiron as saying that he expects CPO prices to increase to between RM2,100 per tonne and RM2,500 per tonne next year, lifted by factors such as biofuel demand and the price level of petroleum.
“The announcement by the minister to impose a requirement for the usage of 7% palm oil in biodiesel from 5% now is a way to firm up the CPO price,” he told reporters on the sidelines of the event.
This article first appeared in The Edge Financial Daily, on October 29, 2014.