B10 programme mandatory for petrol stations by February 2019

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PUTRAJAYA (Jan 17): Petrol stations nationwide will have to switch to B10 biodiesel from the current B7 diesel blend by February 2019, said Primary Industries Minister Teresa Kok.

She said the B10 biodiesel programme was rolled out in December last year for the transportation sector, and has been implemented in phases.

"The B10 programme targets to increase the blending ratio of palm biofuel in diesel from 7% to 10%.

"The government has announced the B10 mandate for the transportation sector as part of the crude palm oil supply management mechanism to stabilise palm oil prices by reducing the high domestic stock level and increasing the sustainability of energy sources," she said in her keynote address at the Palm Oil Economic Review and Outlook Seminar 2019 here today.

Her speech was read by her deputy, Datuk Seri Shamsul Iskandar Md Akin.

Kok said the B7 programme for the industrial sector would be implemented starting July 1 this year, which would boost local demand for palm oil to 386,993 tonnes per year from the current 373,512 tonnes.

"The mandatory implementation (of the programmes) in both sectors is estimated to require 760,505 tonnes of palm oil annually and is expected to have a positive impact on palm oil prices," she said.

Kok said the government also planned to increase the biodiesel blend from B10 to B20 by 2020.

She said the local palm oil industry's performance last year was somewhat mixed, with the industry recording a 3.6% growth in the export of palm oil products.

"But the crude palm oil (CPO) price declined to an average of RM2,232 a tonne in 2018 from RM2,783 in 2017, influenced by the weaker soybean oil price, its main competitor in the world market, and a high domestic palm oil stockpile,” she added.

As a result, the revenue from palm oil products dropped by 12.3% to RM62.68 billion during the January-November period in 2018, compared to RM71.44 billion in the corresponding period of 2017.

"Overall, it was a very challenging year for the trade in vegetable oils and fats.

"The Malaysian palm oil industry is facing numerous challenges arising from the build-up of domestic palm oil stocks, the United States-China trade tensions and the weakened ringgit against the US dollar. Collectively, this has caused the downtrend in the palm oil price," Kok said.

To ensure sustainable production, Kok said the government was committed to implementing the Malaysian Sustainable Palm Oil (MSPO) certification that would become mandatory on Jan 1, 2020.

The certification will elevate the country’s palm oil industry to international standards and widen its market access in the wake of changing global consumer concern.

It would also mark a significant step towards aligning and branding the Malaysian palm oil to globally accepted sustainability practices.

Kok said the government has also launched the “Love My Palm Oil” campaign this year as part of efforts to change the negative perception on Malaysian palm oil.

“Attempts to discredit palm oil will continue to crop up from time to time.

"We cannot afford to act alone to face all the challenges. Therefore, both Malaysia and Indonesia, are working together to address various issues and biased allegations related to the palm oil trade under the Council of Palm Oil Producing Countries," she added.