1/5/06 (The Star)  -  LOCAL plantation companies, particularly those with huge investments in palm-based biodiesel projects, are eagerly awaiting the biodiesel bill to be passed by the Parliament next month. 

The biodiesel bill will pave the way for a clear-cut biodiesel act that would bolster the growth of the commodity. 

The bill, initially scheduled to be tabled last March, was postponed as many believed the Government needed more time to address issues like the biodiesel utilisation in Malaysia, oil subsidies, feed stocks for electricity generation, pricing, the royalty fees biodiesel producers have to pay to the Government and biodiesel exports.

The Government had stated that all diesels sold at petrol stations must contain 5% palm oil from next year. This move would enable Malaysia to save up to 500,000 tonnes of diesel imports, or about 10,000 barrels per day. 

 
Datuk Sabri Ahmad
It is envisaged that some 30 biodiesel plants would be in operation in Malaysia over the next three years. Malaysian Industrial Development Authority has, to-date, approved 14 biodiesel projects. 

An industry player said: “The current rage in biodiesel plants in Malaysia is positive, as many foreign investors are knocking on our doors to venture into this business. It's a good sign that fresh flow of foreign direct investments will be back into the country.”

However, without a concrete and proper biodiesel act, he said many were still reluctant to venture into the biodiesel business in Malaysia.

Golden Hope Plantations Bhd group chief executive Datuk Sabri Ahmad said: “While focusing on the local conditions, the national biodiesel act must also have a global approach.”

To date, most of the local plantation players undertaking biodiesel projects have indicated that their production is mainly for exports. Hence, the location of most biodiesel plants in Malaysia near the ports.

For example, plantation group Kulim Bhd is locating one of its joint-venture biodiesel plants with Europe-based Peter Cremer Group near the Pasir Gudang Port in Johor while its other biodiesel plant is in Jurong Island, Singapore.

Roundtable on Sustainable Palm Oil (RSPO) advisor M.R. Chandran said the National biodiesel act must be well-placed because without any legal framework, “it will be difficult to attract foreign investments with big capital”.

He said a more balanced and lasting result required balanced “incentives” by the Government and a longer-term perspective from the industry. Both should be targeted on second-generation products instead of burning high quality food ingredients. 

 
Chandran said the time was right to re-visit the longer-term plans and to focus on other renewable materials with a higher contribution, lower negative impact and higher productivity per unit area, like palm oil. 

 
He said other sources of renewable energy such as pulp, residue and waste could provide substantial benefits compared with vegetable oils. 

For example, ethanol from sugar cane or cellulose feedstock showed a much higher net energy contribution and a better greenhouse reduction effect than rapeseed oil widely used in Europe as feedstock for biodiesel.
For Malaysian biodiesel players, Chandran said: “Why not focus on Asian, in particular Asean markets, which are the growth areas over the next 10 years?” he asked, adding that traditional biodiesel markets like Europe and the US were cutting back on their oil imports.