MARKET DEVELOPMENT
Excuse for not setting up biodiesel factories
Excuse for not setting up biodiesel factories
25/4/07 (NSTP) - Many biodiesel licensees are reluctant to set up factories while palm oil is enjoying a global boom.
COMPANIES awarded a bio-diesel licence are dragging their feet in setting up factories because of the high price of crude palm oil.
To produce biodiesel, companies need to buy crude palm oil at the market price.
Plantation Industries and Commodities Ministry parliamentary secretary Datuk Dr S. Vijayaratnam said crude palm oil, trading at RM2,100 per tonne, was one of the cost deterrents for setting up a factory.
He said 90 licences were awarded to companies as of March 31 but only six factories were up and running.
Two are in Selangor and the rest in Johor.
Collectively, the six factories produced 107,343 tonnes of biodiesel up to March.
"The high price of crude palm oil is why a biodiesel venture is not financially viable at the moment," Vijayaratnam said.
The ministry had advised industry players to diversify, having both factory and oil palm plantations to offset any slowdown.
"When the price of crude palm oil is high, the plantations can generate good profits and when the price drops, they can enjoy profits from biodiesel production."
Earlier, Vijayaratnam assured Datuk Seri Diraja Syed Razlan Syed Putra Jamalullail (BN-Arau) and Datuk Mohd Said Yusof (BN-Jasin) that although the companies could transfer their licences to other parties, the ministry had introduced a mechanism to ensure there would be no "sale" of the licences.
"As it is a business transaction, the holders of the licences can offer them to any interested party.
"However, those who wish to buy a licence have to resubmit their applications to the ministry and fulfil certain conditions."
To date, none of the companies has resold its licence.
COMPANIES awarded a bio-diesel licence are dragging their feet in setting up factories because of the high price of crude palm oil.
To produce biodiesel, companies need to buy crude palm oil at the market price.
Plantation Industries and Commodities Ministry parliamentary secretary Datuk Dr S. Vijayaratnam said crude palm oil, trading at RM2,100 per tonne, was one of the cost deterrents for setting up a factory.
He said 90 licences were awarded to companies as of March 31 but only six factories were up and running.
Two are in Selangor and the rest in Johor.
Collectively, the six factories produced 107,343 tonnes of biodiesel up to March.
"The high price of crude palm oil is why a biodiesel venture is not financially viable at the moment," Vijayaratnam said.
The ministry had advised industry players to diversify, having both factory and oil palm plantations to offset any slowdown.
"When the price of crude palm oil is high, the plantations can generate good profits and when the price drops, they can enjoy profits from biodiesel production."
Earlier, Vijayaratnam assured Datuk Seri Diraja Syed Razlan Syed Putra Jamalullail (BN-Arau) and Datuk Mohd Said Yusof (BN-Jasin) that although the companies could transfer their licences to other parties, the ministry had introduced a mechanism to ensure there would be no "sale" of the licences.
"As it is a business transaction, the holders of the licences can offer them to any interested party.
"However, those who wish to buy a licence have to resubmit their applications to the ministry and fulfil certain conditions."
To date, none of the companies has resold its licence.