FGV: Start using B10

This is written by my colleague Zaidi Ismail.

KUALA LUMPUR: MALAYSIA must implement the use of B10 biofuel now to help lift weak crude palm oil (CPO) prices as well as reduce national stockpile.

The B10 is a mixture of 90 per cent diesel and 10 per cent palm methyl ester, which can trim carbon emissions in the environment as well as reduce dependency on fossil fuels.

Felda Global Ventures Holdings Bhd (FGV) president and chief executive officer Datuk Sabri Ahmad said the government must start using B10 because current low CPO prices may weaken further by October, if no positive measures are taken soon.

October, November and December are traditionally high production months for oil palms, which may put a dent on CPO prices. The commodity is currently hovering at RM2,400 a tonne compared with an average of above RM3,000 last year.

"Once B10 is implemented, it can take out one million tonnes out of the 2.6 million stockpile.

"This will help stabilise CPO prices which are currently on a downtrend," Sabri said during a visit to the New Straits Times Press headquarters here yesterday.

Malaysia mooted the use of B5 (95 per cent diesel and 5.0 per cent palm oil) in 2006 and was supposed to implement its use nationwide by end of last year.

But to date, the green oil has yet to be used on a large scale due to the high cost of production, heavy subsidies incurred by the government, as well as poor demand from export markets.

In June 2012, the Plantation Industries and Commodities Ministry announced revival of the plan and to ramp it up to B10.

Currently, the ministry is in consultations with various parties to revive the programme, which covers the central region such as Putrajaya, Malacca and Negri Sembilan, Kuala Lumpur and Selangor. It will power up government vehicles before being sold at petrol stations nationwide. Sabri said industry players are currently undertaking a study on how it can assist the government to implement the B10.

This year, Sabri said FGV, which is the world's largest producer of CPO, expects to maintain its performance. FGV made a lower pre-tax profit of RM900 million in the third quarter ended September 2012 compared with RM1.5 billion a year ago, due to lower CPO prices.

Having raised RM4.4 billion from its initial public offering in June last year, FGV plans to use a portion of the proceeds to buy agriculture land in Myanmar and Mindanao in the Philippines to plant rubber and oil palm trees.