High CPO prices hold back biofuel move

Malaysia’s Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui said the government has decided to postpone implementation of the Biofuel Industry Act 2006. With crude palm oil (CPO) prices now way above the RM2,200 mark (US$638) (for biofuel manufacturing to be viable, CPO prices must remain below RM2,200 a ton), manufacturers of biodiesel may eventually pass on the increase in raw material cost to consumers. “At this juncture, the Act has received the minister’s agreement but has not been approved by the Cabinet and there is no set target on when we can implement the Act,” Chin said in Kuala Lumpur after launching the Annual International Palm Oil Congress (PIPOC 2007). Chin said the current high palm oil prices, such as palm olein, is too high and if implemented, the government may be forced to subsidize to make biodiesel competitive. Under the Act, the Malaysian Palm Oil Board (MPOB) will be able to issue and revoke biodiesel production and export licenses, instead of the Malaysian Industrial Development Authority, an agency under the International Trade and Industry Ministry. The Act will also enable all diesel-powered vehicles in the country to use palm oil-based biodiesel, thus giving the public a choice over ordinary fossil fuel-based diesel fuel. It will also set a ceiling price for biodiesel to sell the green fuel to consumers. (August 29, 2007)