FACTBOX-Asian palm producers revive biofuels on price slump

KUALA LUMPUR, March 10 - Worried that palm oil prices could slide further amid strict European environment regulations for biofuel imports, top producers Indonesia and Malaysia have revved up their fledgling biofuel industries this year.

Both countries need biofuel manufacturing to soak up excess palm stocks while Indonesia has the added reason of trying to cut petroleum imports to cater to its diesel market, which is more than double Malaysia's consumption of 10 million tonnes.

Here are some key facts on the mandates and their impact on government spending, stock levels and idle plant capacities.

WHAT ARE THE MANDATES?

* Indonesia took the lead by issuing a ministerial decree last September which requires the transportation sector this year to use a blend of 1 percent palm-based biodiesel while industry and power plants must use a blend containing 2.5 percent and 0.25 percent.

* By 2010, the palm-biodiesel content will be increased to between 2.5 and 3 percent for transportation, 5 percent for industry, and 1 percent for power plants.

* Malaysia followed in October with a mandate for a 5 percent palm-fuel blend with fossil diesel, gradually starting with government vehicles this year before moving on to industrial and transportation sector in 2010.

HOW MUCH PALM OIL WILL BIODIESEL MANDATES SOAK UP THIS YEAR?

* Indonesia may give up 1.2 million to 1.5 million tonnes of palm oil this year for biodiesel, Bayu Krisnamurthi, deputy to the chief economic minister, said. This accounts for up to 7.3 percent of the industry's forecast palm oil output of 20.3 million tonnes.

* Reuters and trade calculations put the figure much lower, at 805,000 tonnes, or 4 percent of total output.

* Malaysia will take out 200,000-500,000 tonnes in 2009, depending on the speed of using biofuel for government vehicles and industrial sector, Commodities Minister Peter Chin said.

* This equates to up to 2.8 percent of government's estimated output of 17.8 million tonnes.

HOW MUCH IN SUBSIDIES WILL BE PAID OUT?

* Indonesia will pay a subsidy to biofuel producers starting this year to encourage them to stay on, the government said in January.

* Under the plan, if prices of biofuel products are higher than crude oil-based fuels, the government will pay subsidy of 1,000 rupiah ($0.834) per litre on average.

* State run oil firm PT Pertamina is estimated to blend 163,139 tonnes of bioethanol and 486,641 tonnes of palm-based biodiesel in 2009, a government document showed, which works out to $64.59 million in biofuel subsidies from the state.

* Malaysia will allocate 50 percent of a 400 million ringgit ($107.7 million) from a palm oil stabilisation fund to subsidise palm biodiesel production, said Malaysian Palm Oil Council Chairman Lee Oi Hian. No further details were given.

WHAT HAS HAPPENED TO CURRENT BIOFUEL CAPACITY?

* Indonesia's biofuel policy will see capacity for palm-based biodiesel rising to 5 million kilolitres in 2010 from 2 million kilometres presently, the government has said. Currently, capacity is running at above 20 percent, trade sources say.

* Malaysia has this year resumed issuing new licenses but it is also reviewing permits of 91 existing biofuel plants with a total capacity of 10 million tonnes, Commodities Ministry officials said.

* Only 12 plants are in production, mostly below capacity, in addition to 4 newly completed plants. ($1=11,990 rupiah, $1=3.715 ringgit) (Source: Government officials, traders and Reuters reports)