Malaysia to export excess biodiesel products


Malaysia plans to export excess biodiesel products as the country’s earlier plan for B10 biodiesel continues to be hindered by economic concerns, low crude oil prices and objections from stakeholders.

The B10 programme has been on the drawing board for more than 12 months. However, the implementation for the higher mixture of palm methyl ester (PME) with regular diesel had hit a snag as crude oil prices stayed below US$50 (RM214.50) a barrel.

The local biodiesel sector is also dampened by the B10 delays as the demand for their products slumped and investments worth millions of ringgit failed to generate profit.

Analysts said the B10 will have a more impactful economic benefit when oil prices are above US$50, reducing the country’s oil import bill and mopping the palm oil excess from the market, as well as lifting the commodity’s price.

The B10 biodiesel (for transportation) is a blend of 10% PME and 90% regular diesel.

Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong said the government is still determined to implement the B10 and discussions are underway with the relevant stakeholders.

He said the ministry is still studying the price differentiation between crude palm oil (CPO) and diesel to ensure that any decision will not burden the consumers.

“In the meantime, we will think of a way to export the [higher production of] biodiesel products,” Mah told The Malaysian Reserve (TMR).

No deadline has been set for the B10 implementation.

Malaysia produced 500,000 tonnes of biodiesel last year. Production of biodiesel is expected to reach as high as 650,000 tonnes this year.

TMR had previously reported that the country is witnessing a lot of unused biodiesel capacity, with the loss-making firms being acquired by other parties.

“As of now, biodiesel as a standalone business is not profitable, so I don’t see much investment or even consolidation picking up,” Malaysian Biodiesel Association president UR Unnithan said.

He added that there are some companies in Selangor, Johor and Sarawak that have ceased operations because of unprofitability.

The implementation of B10 biodiesel programme has been postponed since June 2016.

The Brent crude oil was traded around US$48 per barrel, while the CPO price hovers around RM2,500 per metric tonne.