KUALA LUMPUR (Feb 24): The government is facing hurdles in increasing the use of palm oil in the national biodiesel mix under the B20 mandate due to a substantial investment required for its infrastructure development.  

Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani told the Dewan Rakyat on Monday that raising the palm oil content in biodiesel from 10% (B10) to 20% (B20) would require a significant industry investment, which both businesses and the government are reluctant to bear.  

“Our industry currently does not have the necessary blending infrastructure to accommodate B20. An estimated RM643 million investment is required from industry players to build blending capacity,” Johari said during the ministerial winding-up session on the motion of thanks for the royal address.

“So far, in our engagements with industry stakeholders, they have requested that the RM643 million investment be funded by the government. However, the government is not prepared to finance this. We will need to reach a consensus on the way forward,” he added.  

As the world's second-largest palm oil producer, Malaysia introduced its National Biodiesel Programme, implementing a B10 biodiesel mandate for the transport sector in February 2019 and a B7 mandate for the industrial sector in July 2019. 

The programme was later expanded to B20 for the transport sector in selected locations, including Langkawi, Labuan, and Sarawak (excluding Bintulu), starting January 2020. The current biodiesel programme consumes approximately 900,000 tonnes of palm oil annually, Johari noted. 

In contrast, after earlier delays, Indonesia — the world's largest palm oil producer — is set to fully implement its B40 biodiesel mandate next month from B35.

Indonesia had initially planned to launch its B40 programme on Jan 1, 2024, but faced regulatory setbacks. This resulted in fuel distributors being given a transition period until the end of this month.

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