Five petroleum companies to upgrade biodiesel blending facilities
Published on: Friday, November 22, 2019
KUALA LUMPUR: Five petroleum companies have signed a memorandum of agreement (MoA) with the Malaysian Palm Oil Board for the upgrading of biodiesel blending facilities at 35 petroleum terminals across Malaysia.
The MoA encompasses the implementation of the biodiesel programme up to B30.
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The five companies are Petronas Dagangan Bhd, Shell Malaysia Trading Sdn Bhd, Petron Malaysia Refining and Marketing Sdn Bhd, Chevron Malaysia Limited and Boustead Petroleum Marketing Sdn Bhd.
“This commitment is in line with the government’s implementation of B20 in the transportation sector in 2020,” Primary Industries Minister Teresa Kok said on Thursday.
B20 implementation will be carried out in phases starting January and is targeted to be completed by June 2021.
Kok said the upgrading works will be completed in stages as petroleum companies need to conduct a study, which alone would require about a few months.
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The study will be funded by the government via an allocation of RM35 million.
Speaking for Petronas Dagangan Bhd (PDB) and other petroleum companies, PDB Managing Director/ Chief Executive Officer Datuk Seri Syed Zainal Abidin Syed Mohamed Tahir said some of the terminals might require minimal investment.
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“But some major terminals particularly servicing big volume regions like Klang Valley and other parts of the country might require more investment,” he said, adding that out of the 35 terminals, 10 are owned by Petronas.
Meanwhile, the Ministry of Primary Industries is currently in talks with the Ministry of Finance (MoF) to set up a biodiesel stabilisation fund and has proposed that three per cent of the windfall tax imposed on palm oil exporters be refunded and channelled back to the fund.
Kok said the windfall tax is currently imposed on palm oil exporters when palm oil prices in the physical market surpass RM2,500 per tonne.
The fund would be useful to assist the smallholders and subsidise biodiesel blending (for the petroleum companies) when CPO prices hover above diesel.
“So far the MoF did not object to the idea. They also agreed with our request that the windfall tax be channelled to the biodiesel fund,” she said.
However, the Minister said it was still at discussion level and the reason being that the CPO price had only risen a few weeks ago.
Prior to the budget announcement, the CPO price was about RM2,100 and RM2,200 per tonne, she said.
She noted that the implementation of B20 in Malaysia and potentially B30 was in line with the initiative by Indonesia which is going for B30, while Thailand, B10.
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“We see this as an encouraging trend. Biodiesel is the best mechanism to stabilise the CPO price and since palm oil is the third major export of the country, we can if we sustain the CPO price, also stabilise the economy indirectly,” she said. – Bernama