12/12/2008 (Your Renewable News) - Malaysia yesterday said that it would aim to convince independent power producers (IPPs) to boost the use of palm oil as a fuel, but industry observers remained sceptical because of the government's overly high subsidies to support the sector.

The world's second- largest palm producer said that it will sell palm biodiesel at domestic pumps in 2010, as well as lure IPPs to burn palm oil as biodiesel - measures aimed at mopping up excess stocks of the vegetable oil.

The announcement comes as palm oil prices have tumbled nearly two-thirds from a peak of RM4,486 (S$1,869) on a mix of surging stocks and funds fleeing commodity plays while new estates find it difficult to stay afloat.

'By January 2010, palm biodiesel will be available at all the pumps nationwide, of course within reasonable delivery distance,' Plantation Industries and Commodities Minister Peter Chin told reporters, adding that the government was in talks with IPPs to burn the tropical oil as a fuel.

He declined to say how much palm oil will be channelled as biodiesel to the IPPs, which include YTL Power, Sime Darby, Tanjong plc and MRCB.