NST Online » Local News
2008/10/14
PETALING JAYA: All diesel-powered public transport vehicles may have to use five per cent blend of biodiesel (B5) to help shore up palm oil prices.
Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui said this would be decided by the Cabinet Committee on Competitiveness of Palm Oil on Oct 21.
His ministry is pushing for a B5 mandate where five per cent of domestic diesel consumption will be replaced by palm-biodiesel.
"If the B5 blend proposal is approved, it would create new demand for about 500,000 tonnes of palm oil per year," Chin said after officiating the International Rubber Research & Development Board's Natural Rubber Conference 2008 here yesterday.
In the last seven months, palm oil prices have plunged by 60 per cent to current levels of around RM1,800 per tonne.
Oil palm planters have been appealing to the government to take measures to shore up prices.
Rising fertiliser cost in the last two years have raised oil palm planters' production cost to between RM1,000 and RM1,500 per tonne, depending on the maturity of the trees.
If palm oil prices were to fall to RM1,500 per tonne, some oil palm planters may find it no longer profitable to harvest the palm fruits.
The cabinet has to decide who will bear the extra cost if crude palm oil becomes more expensive than diesel.
Ministry officials said oil companies would be briefed if they had to bear the cost of blending palm biodiesel into regular diesel at their depots.
Addressing the Federation of Hakka Associations of Malaysia's annual general meeting in Ipoh on Sunday, Chin said Indonesia was already successfully using biodiesel.
"We have to act fast, especially since crude palm oil prices have been hovering at about RM1,800 per tonne lately. Our neighbour produces a much greater volume of crude palm oil but they are able to absorb it locally.
"We, however, depend on exports so when there's an oversupply and limited takers, we could end up with a greater margin of losses than Indonesia."
Chin said Indonesia had begun mixing three per cent methyl ester with every litre of diesel for industrial purposes from Oct 1.
"Jakarta has already implemented the mixture in the transportation sector and it is only a matter of time before it is used in all 17,000-odd islands while we could be left behind."
In another move to reduce the current oversupply of palm oil, the government has decided to raise the annual export quota of tax-free crude palm oil (CPO) to three million tonnes from 1.5 million tonnes.
This means big palm oil companies such as Felda Group, Sime Darby Bhd, IOI Corp Bhd, Kuala Lumpur Kepong Bhd, United Plantations Bhd, Kulim Bhd and Kwantas Bhd, which have refineries outside Malaysia, can ship out more crude palm oil without being taxed.
The government controls outflow of crude palm oil by imposing heavy tax to encourage local refining.
"We are also stepping up efforts to get oil palm planters to chop down unproductive trees and replant with higher yielding seedlings," Chin said.
"With these three measures (biodiesel mandate, increasing the CPO export quota and replanting), we aim to reduce stock levels to 1.5 million tonnes."
Malaysia and Indonesia produce almost 90 per cent of the world's supply of palm oil.
2008/10/14
PETALING JAYA: All diesel-powered public transport vehicles may have to use five per cent blend of biodiesel (B5) to help shore up palm oil prices.
Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui said this would be decided by the Cabinet Committee on Competitiveness of Palm Oil on Oct 21.
His ministry is pushing for a B5 mandate where five per cent of domestic diesel consumption will be replaced by palm-biodiesel.
"If the B5 blend proposal is approved, it would create new demand for about 500,000 tonnes of palm oil per year," Chin said after officiating the International Rubber Research & Development Board's Natural Rubber Conference 2008 here yesterday.
In the last seven months, palm oil prices have plunged by 60 per cent to current levels of around RM1,800 per tonne.
Oil palm planters have been appealing to the government to take measures to shore up prices.
Rising fertiliser cost in the last two years have raised oil palm planters' production cost to between RM1,000 and RM1,500 per tonne, depending on the maturity of the trees.
If palm oil prices were to fall to RM1,500 per tonne, some oil palm planters may find it no longer profitable to harvest the palm fruits.
The cabinet has to decide who will bear the extra cost if crude palm oil becomes more expensive than diesel.
Ministry officials said oil companies would be briefed if they had to bear the cost of blending palm biodiesel into regular diesel at their depots.
Addressing the Federation of Hakka Associations of Malaysia's annual general meeting in Ipoh on Sunday, Chin said Indonesia was already successfully using biodiesel.
"We have to act fast, especially since crude palm oil prices have been hovering at about RM1,800 per tonne lately. Our neighbour produces a much greater volume of crude palm oil but they are able to absorb it locally.
"We, however, depend on exports so when there's an oversupply and limited takers, we could end up with a greater margin of losses than Indonesia."
Chin said Indonesia had begun mixing three per cent methyl ester with every litre of diesel for industrial purposes from Oct 1.
"Jakarta has already implemented the mixture in the transportation sector and it is only a matter of time before it is used in all 17,000-odd islands while we could be left behind."
In another move to reduce the current oversupply of palm oil, the government has decided to raise the annual export quota of tax-free crude palm oil (CPO) to three million tonnes from 1.5 million tonnes.
This means big palm oil companies such as Felda Group, Sime Darby Bhd, IOI Corp Bhd, Kuala Lumpur Kepong Bhd, United Plantations Bhd, Kulim Bhd and Kwantas Bhd, which have refineries outside Malaysia, can ship out more crude palm oil without being taxed.
The government controls outflow of crude palm oil by imposing heavy tax to encourage local refining.
"We are also stepping up efforts to get oil palm planters to chop down unproductive trees and replant with higher yielding seedlings," Chin said.
"With these three measures (biodiesel mandate, increasing the CPO export quota and replanting), we aim to reduce stock levels to 1.5 million tonnes."
Malaysia and Indonesia produce almost 90 per cent of the world's supply of palm oil.
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