Business

Wednesday March 25, 2009

Deferment of blend biofuel implementation unlikely


KUALA LUMPUR: The Government may not defer the mandatory implementation of the B5 blend biofuel programme by 2010, but to address several critical issues first to ensure its success, said Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui.

Major issues to be addressed include logistics, infrastructure cost, blending facilities and the transportation of palm biodiesel, he said.

Chin said biodiesel consumers should not be penalised just because “we cannot solve the logistics and blending facilities issue.”

“More importantly, we do not want to see too much disparity in the prices of biodiesel and fossil fuels, then somebody will have to carry the burden of subsidy,” he told reporters after officiating the first Asian Biofuel Roundtable 2009 here yesterday.

Chin said the ministry was in talks with the Treasury to provide more incentives to biodiesel producers in Malaysia to ensure the biodiesel business is viable.

Peter Chin

The B5 blend programme, which has been effective since Feb 1, involves the blending of 5% biodiesel with 95% fossil fuel and will be carried out in stages, starting with Government vehicles and followed by diesel vehicles in the industrial and transportation sectors.

Under the programme, all diesel vehicles in the country must use the B5 blend by 2010.

The first phase of the B5 blend programme has covered most of the Klang Valley involving government vehicles owned by City Hall and the Defence Ministry.

“We will soon be looking at the Public Works Department and Health Ministry, which have sizeable fleets of diesel vehicles,” Chin said.

Next on the B5 list is Kota Kinabalu given its huge base of diesel engine vehicle users, according to the minister.

“However, we hope oil companies will help to support in terms of the blending facilities or mixing depots before introducing B5 programme to Sabah,” Chin said.

“Despite Sabah already having biodiesel plants in Lahad Datu and Sandakan, the long distance will involve high transportation cost to Kota Kinabalu.”

Separately, Chin said his ministry would set up a dialogue with the Palm Oil Millers Association (POMA) to get feedbacks on the targeted date for millers to upgrade or retro-fit their palm mills with newer, cleaner technologies.

There are currently 406 palm oil mills nationwide but only about 20 are involved in Clean Development Mechanism (CDM) projects under the Kyoto Protocol which aims to reduce methane gas emission, a contributing factor in global warming.

“Some of our mills are using the technologies from the 1960s and 1970s. Why are they reluctant to upgrade? Is it because of the high capital investment costs or something else?” the minister said, adding that the possibilty of selling carbon credit from CDM projects could help millers offset some of the cost in upgrading their mills.

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