10/08/05 KUALA LUMPUR, Malaysia (AP) -- Malaysia will soon start blendingdiesel with palm oil to power cars and electricity generators to reduceits fuel bill, due to record high oil prices, news reports said Wednesday.

Deputy Prime Minister Najib Razak said diesel, which along with gasolineis heavily subsidized by the government, will be mixed with five percentpalm oil before being sold to consumers, the New Straits Times reported.

It quoted Najib as saying that full details of the new fuel policy will beannounced late Wednesday by Prime Minister Abdullah Ahmad Badawi.

Najib's office would not confirm the comments.

"The policy is imminent because we are pushing on the use of biodiesel,"the daily quoted Najib as saying. The report did not say when the palm oilbased diesel will start being sold.

Palm-oil blended diesel is a technologically proven fuel.

Malaysia is the world's largest exporter of palm oil and the move isexpected to help shore up prices of the commodity. Blending palm oil withdiesel will also help cut imports of diesel, which has risen along withsurging crude oil and gasoline prices in recent months.

Malaysia has been working on ways of using alternative sources ofrenewable energy including the use of vegetable oils, wind and hydroinstead of crude oil.

The New Straits Times said the government will enact a Biodiesel Act whichwill include provisions on the use of crop-based diesel by the country'smanufacturing and power generation sectors as well as the public transportoperators.