Govt to spend less on fuel subsidy with B10 mix


The implementation of the B10 biodiesel programme in the middle of next year is expected to result in fuel subsidy savings for the federal government.

Primary Industries Minister Teresa Kok (picture) said the lower price of biodiesel at RM2.28 per litre against the current industry price of diesel at about RM2.60-RM2.80 per litre would translate into significant savings for both the government and industry players using the B10 blend.

The higher biodiesel mandate, which will effectively increase the quantity of palm oil methyl ester blend in petroleum diesel to 10% from the current 7%, is expected to be implemented in the second half of 2019.

“If B10 is used in the transportation sector, it will allow the government to save up to RM10.7 million a year on fuel subsidies. This will also allow us to reduce diesel import costs by RM1.6 billion per annum,” Kok said at the Dewan Rakyat yesterday. She was responding to a follow up question by MP Chan Foong Him (Pakatan Harapan-Kota Kinabalu), who queried the amount of cost savings expected under the B10 programme.

Kok said the industrial sector could also see a reduction in costs by RM6.5 million a year, if the current price gap between biodiesel and diesel is maintained.

She said a memorandum is expected to be tabled to the Cabinet soon on increasing the biofuel blend to 10% for the transportation sector and 7% for the industrial sector nationwide.

The move would consume 760,000 tonnes of palm oil a year and strengthen the price of one of the country’s top commodities.

The country first introduced the biodiesel programme in 2011 with a blend rate of 5% or B5. Since then, the blend rate has increased to B7.

The industrial sector, however, still uses diesel fuel. The use of B7 consumes 350,000 tonnes of palm oil annually, Kok said.

The B10 biodiesel mandate has faced several delays in recent years. The government first anticipated the policy to be introduced on Dec 1, 2016. However, it was postponed twice.

In August last year, the previous administration said it was in the middle of gathering statistical evidence to prove that locally produced palm biodiesel does not harm diesel engines.

Efforts to implement the B10 programme in Malaysia have been dampened by pessimistic comments from automakers. German companies BMW AG and Volkswagen AG, for instance, said the B10 mixture was not compatible with their diesel engines.