Plan to produce 50pc more biodiesel

PASIR GUDANG, Johor: Malaysia is expected to produce 50 per cent more biodiesel this year to 375,000 tonnes this year, thanks to price differential between crude oil and palm oil prices that is favourable to exports. 

Currently, there are seven plants in Selangor and Johor that are in active operations, said Plantation Industries and Commodities Minister Datuk Seri Douglas Embas.

“Palm oil prices is averaging at around RM2,300 per tonne while petroleum is being sold at around US$108 per barrel. In view of this favourable price differential in the export market, our biodiesel industry is now able to churn out between 300,000 and 400,000  tonnes a year,” the minister told reporters yesterday after launching the Southern Region B5 rollout at a service station in Pasir Gudang, Johor. 

Also present at the ceremony were Plantation Industries and Commodities ministry secretary general Datin Paduka Nurmala Abdul Rahim, Malaysian Palm Oil Council chief executive officer Tan Sri Yusof Basiron and Malaysian Palm Oil Board (MPOB) director general Datuk Dr Choo Yuen May. 

Former formula 1 racing driver Alex Yoong was appointed B5 biodiesel spokesman.

 B5 is a blend of 95 per cent regular diesel with five per cent palm biodiesel. "In Malaysia, B5 is being subsidised at the pump in the central region of the country. We've spent RM74 million in B5 subsidies last year. 

"In the first half of this year the subsidy amounted to RM7.6 million," he said.   

In a move to promote the usage of biodiesel two years ago, the government has started to subsidise the price differential between diesel and biodiesel through Automatic Pricing Mechanism. It was then reported the biofuel subsidy fluctuated between 5 sen and 7 sen per litre. 

At current palm oil and diesel prices, the subsidy has settled to around 1 sen and 2 sen per litre. 

MPOB said the B5 rollout in Johor involves 415 service stations and 37,270 tonnes of palm oil biodiesel will be used in a year. "This will contribute to a saving of 43.14 million litre of fossil diesel per year," Embas said.   

Since June 2011, central region launches covered Malacca, Negri Sembilan, Putrajaya, Selangor and Kuala Lumpur. Now, with the addition of Johor, all five states will need around 150,000 tonnes of biodiesel per year to be implemented. This is about 30 per cent of the 500,000 tonnes per year of biodiesel required for nationwide implementation.

On top of the B5 subsidies, the government has also allocated around RM50 million for in-line blending facilities at depots owned by five oil companies, namely; Petronas, Shell, Petron, Chevron and Boustead Petroleum Marketing.

Among depots in the central region that is being fitted with blending facilities are Klang Valley Distribution Terminal, Tangga Batu, Port Dickson, Westports and Northport. In Johor, all three depots are located at Pasir Gudang.