TEMERLOH, May 4 (Bernama) -- The government would expand the usage of the palm oil based fuel or Envo Diesel commercially next year as an alternative to petroleum.

Deputy Minister of Plantation Industries and Commodities, Datuk Anifah Aman said that the biodiesel was currently being used by vehicles in government agencies and ministries on a trial basis before commercialisation takes off.

"We have signed a Memorandum of Understanding with three government agencies, namely the army, Dewan Bandaraya Kuala Lumpur (DBKL) and the Public Works Department," he told reporters after officiating the Malaysian Palm Oil Board's Temerloh branch office here Thursday. He also launched a group fertilizer scheme at the event Thursday.

He said his ministry, through MPOB, was collaborating with several local companies for the building of three biodiesel plants to help increase palm oil production while stabilising its price in the market.

The use of biofuel in a commercial way would help reduce the government's rising expenditure in providing high subsidy for fuel amid the increasing oil price.

Anifah said that the country's palm oil production which has gone up to 15 million tonnes, contributing to an export earning of RM28.60 billion last year, would help the government reach its goal.

In his speech earlier, he said the national average production of palm oil was around 3.80 tonnes per hectare last year, which was close to the target figure of four tonnes per hectare.

"I understand that the production of palm oil is based on the fresh fruit bunches and the oil extraction rate (OER). If both these factors are up, it would certainly bring a rise to palm oil production," he said.

He said the national OER has gone up to 20.15 percent, the highest level in the last 20 years.

-- BERNAMA