Malaysia wary about biodiesel mandate

Malaysia is wary about implementing biodiesel mandates on fears that volatile palm oil feedstock prices will incur more subsidies and strain government budgets, a senior industry official said. U.R. Unnithan, deputy president of the Malaysian Biodiesel Association, said the reluctance to enforce biodiesel mandates, announced last year when prices plummeted, had left the 200 million ringgit (US$57.41 million) industry fund for subsidies untouched. “The government sees palm-biodiesel (mandates) in the short term, to shore up slumping prices, and then they back off when prices have recovered, it’s not healthy,” Unnithan told Reuters in an interview. He said blending palm biofuel into diesel only increased prices by two to six sen (US$0.01-0.02) a liter over petroleum diesel. Petroleum diesel retails at 1.66 ringgit (US$0.48) a liter, a price that is regulated by the government and among the lowest in Asia. Unnithan said implementation of the 5% palm biodiesel blend with petroleum diesel would take half a million tons of crude palm oil out of the market, less than 3% of 2008 output. (July 30, 2009)