Surging crude palm oil prices: Malaysian biodiesel plans in jeopardy

Surging crude palm oil prices have put a dent in Malaysian ventures to manufacture biodiesel, with licencees dragging their feet to set up factories, officials and a report said Tuesday.

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Crude palm oil prices in recent weeks have hit levels well above 2,000 ringgit (584.45 dollars) per tonne amid increasing demand and supply shortages, compared to prices around 1,500 ringgit in mid-2006.
Malaysia has issued 90 licences to firms to manufacture palm oil-based biodiesel, but Plantation Industries and Commodities Ministry parliamentary secretary S Vijayaratnam said only six factories were running.

He said the companies had to buy crude palm oil at market prices, which was deterring licencees, the New Straits Times reported Tuesday.

“The high price of crude palm oil is why a biodiesel venture is not financially viable at the moment,” Vijayaratnam was quoted as telling parliament.

However, Au Leck Chai, a senior ministry official, dismissed concerns the prices would hurt Malaysia’s nascent biodiesel industry, saying the price rises would only see the departure of smaller firms.

Daily Times