KUALA LUMPUR: The nationwide implementation of the B5 biodiesel programme by July next year will help to stabilise crude palm oil (CPO) prices and significantly reduce the domestic palm oil stocks to below one million tonnes, says a official from the Malaysian Palm Oil Board (MPOB).
Its senior research officer Yung Chee Liang said: "The full implementation of B5 nationwide for the subsidised and non-subsidised sectors will see about 500,000 tonnes per year will be taken up from the current local palm oil stocks. The palm biodiesel can also provide a floor price to the support CPO price at RM2,000 per tonne."
The B5 biodiesel is a blend of 5 per cent palm oil or palm methyl ester with diesel fuel.
For most part of this year, CPO has been trading at the range of RM2,300 to RM2,400 per tonne due to the high palm oil inventories and high output in Malaysia. CPO prices only started to pick up since October to trade at about RM2,500 per tonne level currently.
Apart from B5 biodiesel programme, the Government was seriously looking at the introduction of B7 and studying the prospect of B10 biodiesel programme in the near future, said Yung in his presentation on the Biodiesel Implementation in Malaysia -Progress, Challenges and the Way Forward at the MPOB's International Palm Oil Congress 2013 yesterday.
As at end-September, the Government had approved 60 biodiesel manufacturing licences with a total annual capacity of 6.5 million tonnes.
Of the total, 21 biodiesel plants have been commissioned since 2006 with production capacity of 2.96 million tonnes per year.
From January to September this year, there were 12 biodiesel plants in operation with total annual production capacity of 1.22 million tonnes.
The biodiesel programme has contributed to 44 per cent increase in palm biodiesel production to 249,213 tonnes in 2012 compared with 173,220 tonnes in 2011.
However, despite the current renewed interest in palm biodiesel production among the players, Yung said: "There is a need to subsidise the higher price of biodiesel so that consumers are charged with the same price as they are currently paying for the diesel fuel."
Furthermore, there is also a need to finance the construction of in line blending facilities for petroleum companies.
For full-national implementation, Yung noted that some RM300mil (S$117 million) was needed for the setting up of in-line blending facilities for 35 petroleum terminals and depots while another RM300mil to RM500mil per year for additional subsidies.