Palm oil's portion in biodiesel to be halved

Palm oil's portion in biodiesel to be halved
Business Writer: Yuthana Praiwan

The Energy Ministry will cut the proportion of palm-based biodiesel (B100) in retail biodiesel to 3.5% from 7% to spare crude palm oil supply and help prevent a shortage in the food industry at a time when domestic palm oil production is in seasonal decline.

Petrol stations will begin selling retail biodiesel with the lower percentage of B100 tomorrow.

The cut could last until the country's crude palm oil stocks return to a secure level, said Witoon Kulchroenwirat, director-general of the Energy Business Department.

The National Oil Palm Policy Committee, chaired by Deputy Prime Minister and Defence Minister Prawit Wongsuwon, on Monday approved a plan to import 50,000 tonnes of crude palm oil to guard against a shortage of retail cooking oil on shelves.

Palm fruit production typically tumbles during the early dry season (December-February), when the weather reduces the crude palm oil stocks that supply the food and biofuel sectors.

Thailand's crude palm oil stocks have fallen to 100,000 tonnes a month from 150,000 tonnes, according to Commerce Ministry data.

The move by the government to import crude palm oil is aimed at maintaining the domestic retail price of cooking oil at 42 baht a litre and preventing a rise in food prices.

Oil and gas conglomerate PTT Plc has pledged to abide by the decision. The company will need up to three weeks to sell all its B7, a diesel fuel with 7% palm oil proportion.

Since the scarcity of crude palm oil will raise the price of methyl ester (pure biofuel), the reduction in the palm oil proportion will help to shrink the retail price of B3.5 and alleviate the burden on motorists in general, said Saran Rangkasiri, a senior executive vice-president of PTT.

The reduction is expected to spare crude palm oil stocks to the tune of 60,000 litres a day.

State majority-owned Bangchak Petroleum Plc said the situation was a repeat of what occurred in 2012, when crude palm oil stocks dropped far below domestic demand, forcing the Energy Ministry to ask oil refiners and traders to cut palm-based methyl ester to 3% from 5% for the same reason.

Pongchai Chaichirawiwat, a senior executive vice-president of Bangchak, said the crude palm oil imports would start next month, when motorists were expected to enjoy lower retail prices for B3.5 fuel.

But the move towards more imports has raised the ire of domestic oil palm growers.

Farmers held an urgent meeting in Nakhon Si Thammarat's Muang district earlier this week to discuss how to respond to the government's plan.

Somporn Sripetch, chairman of the province's Palm Farmers Association, said growers might stage protests in response to the stepped-up imports.

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