This article first appeared in The Edge Financial Daily, on January 29, 2016.

KUALA LUMPUR: Biodiesel producers, which are seeing low capacity utilisation that has  led to some of them being unable to cover their production costs, are hoping that the government will implement the B10 mandate from as early as April, to boost their utilisation rates.

The Malaysian Biodiesel Association (MBA), which represents some 22 biodiesel players in the country with a combined capacity of 2.5 million tonnes, said utilisation rate of their capacity is at less than 30% now.

“The industry clearly has such low capacity utilisation, I wouldn’t say it is very healthy. But it is robust enough to weather the situation and work hand in glove with the government to increase domestic usage,” said MBA deputy president U R Unnithan.

Unnithan said he is confident that the B10 can be implemented by April, though he conceded that it is a multi-stakeholder consultative process that will take time before a decision is arrived at.

However, he stressed that there is no hurdle to the implementation of the biodiesel programme, which will see a biodiesel blend of 10% palm-based methyl ester with petroleum diesel, as the blend is technically viable.

Unnithan said there is currently no opportunity for the discretionary blending of biodiesel for exports. Hence, each biodiesel producer, be it one who produces biodiesel from palm oil or soy oil, has to depend on the national mandate of each country.

“We hope the government will launch the B10 programme as soon as possible,” Unnithan added.

Plantation Industries and Commodities Minister Datuk Amar Douglas Uggah Embas recently said the ministry aims to present a paper on the B10 programme to the Cabinet by end-February.

Last June, Uggah announced that the government would implement the B10 mandate by as early as October, but that was eventually postponed to obtain further feedback from automakers after some had expressed concern that the blend might harm car engines.

Meanwhile, if the B10 is implemented, the MBA expects the utilisation of palm oil for biodiesel to rise to 1.2 million tonnes per year, of which 0.8 million tonnes will be for the transport sector, with the remaining 0.4 million tonnes for industrial use.