KUALA LUMPUR: Malaysia's B10 programme will increase local consumption of palm oil and help reduce surplus in the global market, Primary Industries Minister Teresa Kok said.
Malaysia will start to phase in B10 biodiesel mandate from December 2018, with the new rule coming into full force from February 2019, in efforts to support palm oil prices that had fallen below RM2,000 per tonne.
Since last month, benchmark palm oil prices slumped to a near three-year low, below the psychological level of RM2,000 per tonne due to high inventories from rising oil palm fruit harvests.
"At the current low price of palm oil, I think it is timely for Malaysia to be in line with Indonesia in implementing a higher biodiesel mandate," she told reporters at a briefing here today.
“Fishermen, who are among targeted groups identified by Finance Ministry consuming subsidised diesel, will continue as usual as Malaysia raises biodiesel mandate to B10 from B7,” she said.
Kok estimated the B10 mandate would consume about 761,000 tonnes of palm oil annually in Malaysia.
Also present were Primary Industries Ministry's secretary-general Datuk Zurinah Pawanteh, Malaysian Palm Oil Board director-general Datuk Dr Ahmad Kushairi Din, representatives of fuel retailers, Federation of Malaysian Manufacturers president Datuk Soh Thian Lai, Malaysian Biodiesel Association (MBA) deputy president Long Tian Ching, Selangor and Federal Territories Engineering and Motor Parts Traders Association (EMPTA) chairman Yap Son Chee and Express Bus Operators Union of Peninsular Malaysia deputy secretary Tajarul Yusmi Mohd Yusup.
Kok recalled the nation's biodiesel programme was introduced in 2011 with a blend rate of B5 (5 per cent biodiesel mixed with 95 per cent petroleum diesel).
The mandate was raised to B7 in November 2014.
"The B10 mandate, as announced in the 2019 Budget, will kick off for the transportation sector in phases beginning from December 2018 and mandatory retail at fuel stations from February 2019,” she said.
She added that the B7 programme for the industrial sector would be implemented from July 2019.
Tajarul said his association members were supportive of the government’s B10 mandate.
“Truck manufacturers, such as Scania, and bus manufacturers have assured us of engine warranty extension with usage of B10 in Malaysia.
“So, our members are confident and supportive of the B10 biodiesel mandate,” Tajarul added.
Yap concurred that EMPTA members were supportive of the government’s initiative to implement B10 mandate, a cleaner and greener fuel.
Finance Ministry had previously announced biodiesel suppliers are exempted from paying the 10 per cent Sales and Services Tax when they sell the fuel to oil companies Petronas, Shell, Petron and BH Petrol.
Long noted that since palm biodiesel has been trading at a much cheaper price than regular diesel for the past few months, MBA members had seen higher exports to China.