KUALA LUMPUR: The government is engaging with truck manufacturers on B10 bioiesel mandate before the planned implementation in the second half of 2019.
“We must have warranty from the manufacturers that guarantees this B10 biodiesel blend is alright for their vehicles,” Primary Industries deputy minister Shamsul Iskandar Mohd Akin said in a statement.
It was previously reported that some vehicle manufacturers from Europe and the US withhold their warranty as they protested against the B10 biodiesel mandate.
They cited fear of incompatibility with truck engines while other manufacturers from Japan did not have complaints of the B10-grade fuel.
"The ministry would only announce the implementation of the programme by end of 2018 and furthermore, this is subject to Cabinet approval," Shamsul added.
His statement was in response to an earlier interview with a foreign newswire announcing Malaysia will implement B10, a higher biodiesel mandate in the second half of 2019, from the current B7.
The B10 policy mandates the use of palm oil in diesel. At the moment, diesel sold has a 7 per cent palm oil content and is called B7.
The government is looking at increasing the blend to B10, meaning 10 per cent of palm oil content in diesel.
This week, the government had set diesel pricing at the pump at RM2.18 per litre.
Malaysia's biodiesel industry is made up of 17 plants, with total installed capacity of 2.1 million tonnes.
Since 2016, Malaysia’s implementation of the B10 biodiesel mandate has been delayed because it would result in diesel-engined vehicles paying higher prices at the pump or the government having to subsidise this renewable fuel.
Palm oil prices have declined from last year as global supply exceeds demand. For the past month, crude palm oil futures on Bursa Malaysia Derivatives Market averaged at around RM2,200 per tonne.
On the other hand, world petroleum prices have been on the rise from last year and have been averaging slightly above US$70 per barrel.
Shamsul, in his statement, noted the current price gap between Brent oil and crude palm oil is conducive for higher blending of biodiesel to be implemented in due course.
He explained the higher biodiesel blending mandate will soak up excess supplies of palm oil, used as feedstock to make biodiesel.
Inevitably, this move to help reduce palm oil stockpile would support prices to trend higher for the benefit of Malaysia's economy.