30/10/2007 (Forbes), Kuala Lumpur - The mass production of palm oil-based biodiesel in Malaysia has been slow in taking off as the current high price of crude palm oil has made the use of the alternative energy source uncompetitive, a local daily reported Wednesday.

Malaysia has approved 91 projects to build biodiesel plants at end-September but so far only four plants have begun operations, Plantation Industries and Commodities Ministry parliamentary secretary S Vijayaratnam was quoted by the Edge Financial Daily as saying.

Meanwhile, another four plants are in the midst of a trial phase for mass production, said Vijayaratnam.

'Based on the high price of palm oil -- which is the raw material feedstock of the biofuel at the moment -- the use of biofuel is not competitive,' he said.

Riding on a global commodities boom, crude palm oil prices continued to hit records in recent days with crude palm oil futures contracts traded on the Malaysian derivatives exchange currently trading above 2,800 ringgit per metric ton.

Malaysia has postponed the implementation of a biofuel bill, aimed at enabling the

commercialisation of a Malaysian-made biodiesel, due to surging feedstock prices.

The transportation sector consumes 10 million metric tons of fossil diesel annually and the government is hoping to cut local consumption of fossil diesel by about 500,000 metric tons every year by mandating a 5 percent biodiesel blend with fossil diesel.