MALAYSIA is seriously considering legislation to mandate the blending of diesel with palm oil as an environmentally-friendly fuel, said Primary Industries Minister Datuk Seri Dr Lim Keng Yaik.
My ministry is working out the economic model for the legislation to ensure that blended diesel fuel will not become expensive whenever the price of palm oil rises,'' he told reporters after launching the Malaysian Palm Oil Board's International Palm Oil Congress (PIPOC 2003) in Putrajaya yesterday.
We hope that with the economic model, we can follow other developed countries' moves to legislate urban cities to use more environmentally-friendly fuel, he added.
Apart from reducing pollution, the blending of diesel with palm oil would help reduce stocks of palm oil and keep prices at an acceptable level.
Lim said blending palm oil with diesel could also act as a safety net if palm oil prices were to trend downwards.
He noted that palm oil had the potential to become the fifth source of energy for the country.
At the same time, Lim said Malaysia would put forward a proposal to Indonesia on the blending of diesel with palm oil as one of the many areas that both countries could work together for the benefit of the industry.
He said Malaysia and Indonesia needed to cooperate better as they were the two largest producers of palm oil.
Both countries should try cooperate and not undercut each other to compete for existing markets, Lim said.
He said Malaysian and Indonesian industry players could work together in joint research, like introducing the use of palm oil, especially liquid-based oil palm biomass, to generate electricity or fuel.
Indonesia will require help from Malaysia since its palm oil activities are still unorganised, Lim added.
Indonesia is expected to takeover as the world's largest producer of palm oil by 2005.
On the crude palm oil (CPO) prices, Lim is confident that it would remain at current favourable levels until year-end.
Prices are maintaining and I think it should not be a problem (to maintain the high prices) because demand is still good and we are reaching almost the end of the high production month, he added.
CPO prices are hovering at between RM1,350 and RM1,450 per tonne level.
Lim expects production this year to be 12.5 million tonnes against last year's 11.9 million.
We believe that this year would be a good year for exports. We expect exports to reach about 12 million tonnes for the whole year, he added.
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