KUALA LUMPUR, Dec 23 (Bernama) -- The government will not increase theceiling price of cooking oil although crude palm oil (CPO) price hasincreased to RM1,800 per tonne from around RM1,400 per tonne in the thirdquarter of 2003, Primary Industries Minister Datuk Seri Dr Lim Keng Yaiksaid, here Tuesday.

To reduce the burden endured by cooking oil manufacturers due to theincrease in CPO price, the government will re-introduce the Cooking OilPrice Stabilisation Scheme in the local market from Jan 1, 2004.

Under this scheme, payments would be made to cater the difference betweenthe CPO market price with the threshold price, which has been fixed by thegovernment for the scheme, Dr Lim said in a statement, here Tuesday.

On average the difference between the CPO market price and the price fixedby the government is estimated at RM300 per tonne for the whole of 2004.

"The amount will be borne by the government in the form of grants and inthe form of cess by the industry," he said.

He said that the cess would be collected from CPO manufacturers at a rateof RM0.50 for each RM10 increase in the threshold price of CPO of RM1,450per tonne effective Jan 1, 2004.

The difference between the CPO and the threshold price would be paid tothe the palm oil refinery companies, which would supply it to the cookingoil manufacturers at the price fixed by the government.

Dr Lim said that this would enable the manufacturers to supply cooking oilat a price which is not more than the ceiling price fixed.

He said that the decision was taken after a proposal was accepted that theceiling price of palm oil-based cooking oil enforced in 1997 be reviewedso that local cooking oil manufacturers would not suffer losses, apartfrom ensuring adequate supply.

-- BERNAMA