Malaysia to build first palm diesel factories

Malaysia will soon build its first bio-diesel fuel production plants, to process palm oil, mostly for export to the European Union, the government said Monday.

The Malaysian Palm Oil Board will invest 60 million ringgit (US$16 million; Ђ13.2 million) to set up the plants, each with a 50,000-ton-a-year capacity, said Peter Chin, the plantations, industries and commodities minister.

All the plants will use processed palm oil to produce methyl esther, popularly known as palm diesel, which can be directly used in automobiles without further blending with conventional diesel or gasoline.

Malaysia started considering a palm diesel program several years ago when palm oil prices fell sharply. But with the recent surge in crude oil prices, industry experts say the plan is commercially viable even without much government support.

The government originally planned to build one plant but has decided on three because of strong interest from local plantation companies, Chin said. Two plants will be located in Port Klang in central Malaysia and one in southern Pasir Gudang.

Commercial production will commence within a year after the start of construction, which will begin soon, Chin said, without giving a specific date, reports the AP.