KUALA LUMPUR: The enforcement of the B10 and B7 biodiesel mandate in the transport and industrial sectors has been postponed once again, with no exact date fixed for the implementation.
Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong said in a statement yesterday that the deferment was made after taking into consideration the difference between crude palm oil (CPO) and diesel prices in the current volatile market.
The government will await a suitable time when the gap between the two prices is not so big, he said, adding that it is committed to ensuring that there will be no burden of extra cost to the rakyat at this time.
B10 — to be implemented in the transport sector — is a mixture of 10% palm methyl ester with 90% petroleum diesel, while B7 — to be implemented in the industrial sector — is a blend of 7% palm methyl ester with 93% petroleum diesel.
Plantation analysts were hardly surprised by the latest announcement as the programme had been delayed two times before this.
The ministry had initially targeted to roll out the new biodiesel mandate by June, before postponing it by a month to July.
Earlier this month The Edge Financial Daily, quoting a source, reported that Putrajaya planned to progressively roll out the B10 and B7 blends starting Dec 1.
“The impact is quite muted for the plantation sector as the market has yet to factor in the possible impact of the proposed biodiesel programme,” said a local bank-backed analyst.
“But it would be a bonus to CPO producers should the biodiesel programme really kick in,” the analyst said, noting however that CPO consumption has been capped at about one million tonnes per year.
Another analyst said it would be not economically viable to implement the biodiesel mandate at this point of time, given the low oil price environment and the recent rally in CPO prices.
Over the past month, CPO prices have been on the uptrend, hitting a high of RM2,994.50 a tonne last Friday, from a low of RM2,679.50 on Oct 14.
At this price level, the analyst said, CPO would easily cost about RM2.80 or RM2.90 per litre. This represents a 47.4% and 52.6% premium to the latest diesel pump price of RM1.90 per litre.