Malaysia has been flooded with bids to build bio-fuel plants here, with Australia, Britain, Japan, Germany, Italy and South Korea planning large-scale production, a report said today.

Plantation Industries Minister Peter Chin said at least 10 licences had already been approved, and many other applications were under consideration. Each refinery would cost at least RM30 million (US$8.2 million), he said.

"Offers have come flooding in from private and government agencies from Italy, Britain, Japan, Germany, South Korea and Australia," he told the Star daily.

"All want to invest heavily to manufacture the B5 fuel on a big scale in Malaysia and buy the bio-diesel for use in their home countries."

"We are also vetting through many more applications for the setting up of bio-fuel plants in Malaysia."

On trial basis

Chin said that the fuel - a mixture of diesel with five percent processed palm oil - was being used on a trial basis in several ministries and the Kuala Lumpur City Hall.

"The use of B5 fuel is expected to save the government about 500,000 tonnes of petroleum derived diesel this year," he said, adding that it would be targeted for sale to the public next year.

Malaysia has announced plans to itself build three biodiesel plants, each with annual capacity of 60,000 tonnes of biodiesel, at a cost of RM120 million.

With demand for alternative fuel rising as oil prices skyrocket, the plants will produce bio-diesel for export to the world market and help Malaysia reduce its dependency on fossil fuel.

Malaysia is the world's largest producer of crude palm oil and also aims to be the global leader in bio-fuel production.

Global demand for biodiesel is expected to touch 10.5 million tonnes in the next few years and Malaysia hopes to capture 10 percent of the market.