21/10/2010 (Sabah Today), Kota Kinabalu - The oil palm industry in Sabah cannot replace the role of Sabah Electricity Sdn Bhd (SESB) in power generation.

Plantation Industries & Commodities Minister Tan Sri Bernard Giluk Dompok said to reporters after attending a dialogue on investment opportunities in renewable energy (RE) from the oil palm industry in Sabah yesterday that this was obvious from the outcome of the dialogue yesterday.

The dialogue was held to discuss on RE in view of the challenges that lay ahead in the provision of electricity supply in Sabah, he said.

“I wanted to see how much renewable energy the palm oil industry can contribute towards the production of electricity in Sabah and it is obvious that the industry cannot replace SESB,” he said.

Nevertheless, he lauded the new legislation on RE which may be gazetted in May or June, next year, as this will allow for the revision of the feed-in tariff.

The new legislation will provide the necessary platform for palm oil millers in Sabah to invest in RE industry, taking into account all the incentives available, he said.

Dompok said that the unattractive feed-in tariffs are among the reasons why palm oil millers in Sabah were not keen to invest in RE industry.

Aside from that, they were also faced with the high cost of investment and the uncertainty in the availability of the feedstock as the oil palm biomass can be used for many different applications.

“For example, the empty fruit bunches (EFB) and palm oil mill effluent (POME) can be used to produce fertilisers through mulching and bio-composting,” he said.

He added that the government has been actively promoting the use of sustainable and renewable forms of energy in the country as outlined in the national policies and action plans.

“Under the National Green Technology Policy, the Government has set in place the enabling framework to promote the development and use of energy from renewable sources which are environmentally friendly. In addition, this is also aimed at reducing environmental impacts through the use of fossil fuels,” he said.

He said that the oil palm industry has been identified as one of the 12 National Key Economic Areas (NKEA) to propel the country towards developed nation status by 2020.

“The NKEA lab on palm oil has identified a total of eight entry point projects to generate a Gross National Income (GNI) of RM178 billion by 2020. One of the measures identified involves installing biogas harnessing facilities at palm oil mills. The plan is to install on a gradual basis in all the mills by 2020, with 250 mills capable of supplying electricity to national grid,” he said.

The measure is expected to contribute a GNI of RM2.9 billion and 2,000 new jobs by 2020.

“I am optimistic that the implementation of the biogas harnessing facilities, while complementing the nation’s energy requirements, will also allow the palm oil mills to generate additional income stream. In addition, this will also reflect the environment friendly approach adopted by the industry in the utilisation of oil palm biomass,” Dompok added.

According to him, the government has provided numerous incentives to facilitate palm oil mills to embark on power generation utilising EFB and POME.

The incentives include pioneer status, investment tax allowance, exemption from import and sales taxes and income tax exemption obtain from carbon credit through the Clean Development Mechanism (CDM) projects.

The Small Renewable Energy Power (SREP) Programme has also been established to provide the window to the small power generation plants utilising renewable energy, he said.

“This offers additional revenue stream especially to palm oil mills to generate and sell electricity to the national grid.

“Additionally, the government also provides soft loans under the RM1.5 billion Green Technology Financing Scheme whereby loans of up to RM10 million for each project at two percent interest rate,” he said.

He also reminded millers that the generation of RE is not limited to grid connection, but can also be used for off grid use.

“Mills must look to new sources of revenue and one of them is to explore and exploit potential revenue from renewable energy. The power produced could also be supplied to meet the requirements of rural communities located within palm oil mills,” he said.