by SHAHEERA AZNAM SHAH/ pic by RAZAK GHAZALI
THE Ministry of Finance (MoF) has not opposed the proposed biodiesel stabilisation fund proposed by the Ministry of Primary Industries (MPI) to minimise losses due to the higher global petrol prices.
Primary Industries Minister Teresa Kok (picture; centre) said the MPI and the MoF have been in talks to set up the stabilisation fund, to which the MoF “doesn’t have an objection”.
“If we can stabilise the palm oil sector, we can stabilise the national economy as it is one of the major contributors to the country’s revenue.
“We hope the government could proceed with this fund to help the smallholders and focus on the upstream sector,” Kok said at a signing ceremony between the Malaysian Palm Oil Board (MPOB) and petroleum companies in Kuala Lumpur yesterday.
The proposed fund emulates Thailand and Indonesia’s directive, which assists consumers in coping with fuel price fluctuations.
The introduction of the biodiesel stabilisation fund, which was mooted by the MPI, has been brought up during Cabinet meetings since earlier this year.
MPI has also requested that 3% of the windfall tax currently imposed on palm oil exporters be channelled back to the stabilisation fund, Kok said.
“We have also talked to MoF about the windfall tax. When crude palm oil (CPO) prices closed above RM2,500 per tonne, exporters have to pay a windfall tax,” she said, adding that the MoF has agreed to the suggestion.
Prior to the recent tabling of Budget 2020, CPO prices ranged between RM2,100 and RM2,200.
“MoF didn’t foresee the price could go up to RM2,500. As Indonesia is implementing the B30 programme (biodiesel of which 30% is palm-derived) and Malaysia is moving towards B20 (biodiesel with a 20% palm blend), the utilisation of biodiesel is the best mechanism to stabilise the palm oil price,” she said.
Separately, MPOB has partnered five petroleum companies — Petronas Dagangan Bhd (PetDag), Shell Malaysia Trading Sdn Bhd, Petron Malaysia Refining and Marketing Sdn Bhd, Chevron Malaysian Ltd and Boustead Petroleum Marketing Sdn Bhd, to carry out a study on the upgrading works of 35 biodiesel blending terminals in the country.
The RM35 million study will determine the capability of the blending depots to cater up to 30% palm diesel blend and the cost to upgrade each terminal.
It will prepare the government in implementing the B20 biodiesel programme, which will commence in phases between January 2020 and June 2021.
“We will do it one step at a time as it would take until 2021 to upgrade all the depots. For now, we are going to stabilise the B20 programme first,” Kok said.