Malaysia to promote palm oil as engine fuel

Malaysia to promote palm oil as engine fuel

KUALA LUMPUR (DPA): Malaysia, the world's biggest producer of palm oil, said Friday that it plans to promote the use of the vegetable oil as an environmentally friendly engine oil, a move that would also help it reduce its large stockpile.

Primary Industries Minister Lim Keng Yaik said he hopes that by developing palm oil as an alternative engine fuel, the current stockpile could be reduced by half a million tons, which would help boost prices.

Lim proposed that the "green engine vehicle" program be launched first in Kuala Lumpur and the surrounding Klang Valley area to involve heavy vehicles such as buses and lorries.

"The Klang Valley is always hazy due to the pollution caused by petroleum combustion. Thus, it is suitable that the Klang Valley be the first to start using palm oil as a fuel," he was quoted as saying by the Malaysian national news agency, Bernama.

He said details of the proposed program were being compiled to be submitted to the cabinet for approval into policy.

Lim said there was already a plan to build a 200 million ringgit (US$52.6 million) plant to convert palm oil into engine fuel, and he hoped to rope in major companies, such as state-oil firm Petronas, as investors in the project.

Malaysian palm oil authorities have in recent years undertaken studies and joint projects, together with a German firm, on testing palm oil as an engine fuel.

While the tests have proven successful, officials said they had yet to resolve problems such as how to lower the high cost of converting the oil and vehicle engines to run on palm oil, as well as dealing with logistic problems on refueling stations.

Palm oil is Malaysia's biggest-earning agricultural export, but the commodity has been hit by low prices, increasing competition from neighboring Indonesia and stagnant overseas markets.

India, which last year was the biggest importer of Malaysian palm oil, also rattled Malaysia on Tuesday when it raised duties on imported crude vegetable oils from 15 percent to 25 percent.