ASEAN KEY DESTINATIONS
Malaysia to implement B10 biodiesel programme for transport sector
MALAYSIA will raise its biodiesel mandate to 10 per cent for the transport sector, and to seven per cent for the industrial sector beginning June, the ministry of plantation industries and commodities said the day before yesterday.
The so-called B10 programme with its 10 per cent mandate aims to raise the minimum bio-content of biodiesel from the current seven per cent, mopping up more palm oil for blending purposes and increasing domestic demand.
This could support benchmark palm oil futures, which traded up 0.6 per cent around 2,615 ringgit (US$633) per tonne after the announcement yesterday afternoon.
Both programmes are expected to contribute to the annual domestic consumption of crude palm oil by 709,000 tonnes, the ministry said in a statement.
The Southeast Asian country and world’s second largest producer of palm oil after Indonesia announced earlier it was committed to the B10 biodiesel programme despite a slump in global crude oil prices.
The government said in its statement it had conducted a series of stakeholders’ engagement with transport sector representatives, petroleum companies, biodiesel producers and the industrial sector.
“The implementation of B10 and B7 programmes for both transport and industrial sectors respectively, demonstrates the government’s effort towards reducing dependence on petroleum diesel,” it said.
“In addition, this move also contributes towards reducing greenhouse gas emissions through the use of environmentally friendly energy sources.”
Malaysian traders however say this will have little impact on palm oil prices, as the programme’s expected consumption is low and earlier mandates have seen implementation delays.
“I do not think it will have much impact on the market as the increase in actual tonnage is not much,” said one palm oil producer in east Malaysia on the island of Borneo.
“We think, earlier, they were talking about 500,000 tonnes and now it will be 700,000 tonnes. We are not really sure if the government is going to implement it immediately. They announced B7, but took a much longer time to implement it.”
Malaysia first introduced its biodiesel programme with a five per cent mandate for the transport sector in 2011, and raised it to seven per cent in 2014.
“They are looking at a consumption of 709,000 tonnes annually, which is paltry when you see it on a monthly basis, just 59,000 tonnes,” said another Kuala Lumpur-based broker.
The ministry’s statement added that the biodiesel for both programmes will be supplied by the Malaysian Biodiesel Association, and is expected to save up to 820 million litres
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