‘Impose B10 mandate now amid low CPO prices’

This article first appeared in The Edge Financial Daily, on September 14, 2018.
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KUALA LUMPUR: The government should consider implementing the B10 biodiesel mandate now, in view of the low crude palm oil (CPO) price and expectation that the price will remain low until the end of the year, said FGV Holdings Bhd and the Malaysian Palm Oil Board (MPOB).

It is also a good time to implement the B10 proposal, because of the rising world crude oil prices since the start of the year, they said in a joint statement yesterday.

“Market analysts also expect stocks of Malaysian and Indonesian CPO to increase in the second half of this year, due to high output and this is seen as adding further pressure on world CPO market prices,” they added.

The B10 programme, which will see the minimum bio-content producers must put into biodiesel raised to 10%, was launched in 2013 to increase palm oil consumption as the commodity’s price faced downward pressure, due to increasing inventory.

However, the programme was deferred multiple times due to concerns over potential damage to vehicle engines, which may not fall under the manufacturers’ warranty, although this was disputed by biodiesel producers.

Malaysia’s biodiesel programme began with B5 in 2011, although the initial rollout was planned for 2008. Currently, Malaysia implements the B7 mandate which consists of   a blend of 7% palm methylester (PME) and 93% diesel.

In July, Deputy Primary Industries Minister Shamsul Iskandar Md Akin said that Putrajaya would think about implementing the B10 mandate in the second half of this year, to clear stockpiles and strengthen CPO prices.

Shamsul Iskandar, however, added that the government was waiting for warranty from carmakers, saying it was safe to use the blend.

Meanwhile, FGV and MPOB said they achieved impressive results in biodiesel testing using a 10% PME mixture in its logistics, plant and plant operations.

They said the objective of the B10 usage test is a sign of support for government efforts to increase the biodiesel mandate to B10, and to scientifically prove an increase of 3% does not negatively impact the performance and safety of transport and industrial machinery.

FGV group president and chief executive officer Datuk Zakaria Arshad said a comprehensive B10 usage test was conducted from August 2017 through the logistics division, before being expanded to selected plantations and mill sectors beginning May 2018.

“As at end-August 2018, the FGV logistics division had used 91,536 litres of B10 with a distance of 172,932km, while the plantations and factory operations utilised 26,347 litres and 59,077 litres respectively.”

He said there were no technical issues reported during the test, whereas scientific studies through MPOB showed positive results.