The Energy Ministry is tying down oil traders with an announcement it will increase the content of crude palm oil in biodiesel from 6.6% to 6.8% in a bid to curb slumping palm oil prices.
The current retail biodiesel is called B7, blended with methyl ester (ME) content in a range of 6.6-7%.
According to the ministry, oil traders have to increase the ME to 6.8%, with immediate effect.
"This move can absorb a surplus of crude palm oil by another 62,000 tonnes per annum," the ministry said.
"Oil traders have to report their purchasing orders of biodiesel to the Energy Business Department while officers will also monitor closely biodiesel consumption."
The ministry added that in two months, once the surplus has eased, staff will increase the ME content to 6.9%, which is expected to absorb a crude palm oil surplus of 80,000 tonnes per year.
Palm oil production stood at 15.389 million tonnes this year.
The stock of crude palm oil as of September was 375,591 tonnes, higher than the normal level of 250,000 tonnes.
