Kuala Lumpur, August 10:

Malaysia will soon start blending diesel with palm oil to power cars and electricity generators to reduce its fuel bill, due to record high oil prices, news reports said.

Deputy Prime Minister Najib Razak said diesel, which along with gasoline is heavily subsidised by the government, will be mixed with five per cent palm oil before being sold to consumers, the New Straits Times reported. It quoted Najib as saying that full details of the new fuel policy will be announced today by prime minister Abdullah Ahmad Bad-awi. Najib’s office would not confirm the comments.

“The policy is imminent because we are pushing on the use of biodiesel,” the daily quoted Najib as saying. The report did not say when the palm oil based diesel will start being sold. Palm-oil blended diesel is a technologically proven fuel.

Malaysia is the world’s largest exporter of palm oil and the move is expected to help shore up prices of the commodity. Blending palm oil with diesel will also help cut imports of diesel, which has risen along with surging crude and petrol prices in recent months. Malaysia has been working on ways of using alternative sources of renewable energy including the use of vegetable oils, wind and hydro instead of crude. The New Straits Times reported government will enact a Biodiesel Act which will include provisions on use of crop-based diesel.