Biodiesel enhancement programme helps stabilise CPO prices

The government's commitment in enhancing the biodiesel programme will help stabilise the price of crude palm oil (CPO), Felda Global Ventures Holdings Bhd group president and chief executive officer Datuk Zakaria Arshad said.

He said the government's initiative in increasing the blend for the transport sector from B7 to B10 and introducing B7 for the industrial sector was a timely move.

"It was a great stride to introduce B10. It is not only favoured by nature lovers, but also enables Malaysia to reduce its CPO stockpile, thus helps push up its prices.

"Let's say, we have a stockpile one million tonne of CPO and when 10 per cent (methyl ester) content is effective, the (CPO) stock will dwindle, thus raising the CPO prices," he told Bernama.

B10 is a blend of 10 per cent methyl ester and 90 per cent diesel, while B7 contains seven per cent methyl ester and 93 per cent diesel.

The Ministry of Plantation Industries and Commodities, in a statement, said 709,000 tonnes of CPO is expected to be consumed annually with the implementation of B10 and B7.

Zakaria said FGV has the capacity to produce 10,000 tonnes of biodiesel per month from its two biodiesel mills at the Kuantan Port, Pahang, but currently supplied only 4,000 tonnes of biodiesel to Petronas and Shell.

"We cannot market biodiesel on our own as the allocation is determined by oil companies.

"It is not viable to sell biodiesel by ourselves. If it is not subsided by the government, it is not sustainable as we cannot cover the production cost following slumping oil prices. Thus, we need the government's mandate," he said.

The biodiesel programme was first introduced for the transport sector in June 2011 with the implementation of the B5 biodiesel programme in phases until March 2014 in Peninsular Malaysia.

The programme was later upgraded to B7 and implemented nationwide, including in Sabah and Sarawak starting 2014.

B7 and B10 biodiesel are supplied by 22 members of the Malaysian Biodiesel Association nationwide.