Malaysian UCO requirements may rebuff small collectors

Used cooking oil collection in Malaysia will from now require a licence from the Malaysian Palm Oil Board (MPOB), potentially squeezing smaller suppliers out of the market.

Used palm cooking oil (UPCO) is classified as sludge, which also includes palm oil whose quality has deteriorated as a result of not being stored properly or for too long, residual or spilled oil obtained from manufacturing, refining, storage or transportation, or any expired palm cooking oil.

As such, sludge palm oil dealers need to cough up a licence fee of 100 ringgit/yr ($24/yr) and are subject to four criteria to obtain a permit:

• The business must be registered with the Commission of Malaysia and if it is a cooperative through the Cooperative Commission of Malaysia
• The capital of the entity must be 50,000 ringgit or 100,000 ringgit if it exports
• The entity must have proven legal ownership of the land or premises
• The premises will not be approved if there are storage activities for the purposes of human food and livestock. Terrace and semi-detached sites must be free from the possibility of contamination and the method of storage and handling must be appropriate to the activities of the licence.

Many of the larger aggregators and biodiesel producers in the country are unconcerned as they are already compliant with these rules and the cost is quite low, but smaller outfits may be burdened with excess paperwork and a requirement to upgrade their facilities.

Many small collectors operate without their own premises or storage, which will preclude them from being able to obtain a licence. "They only have a small pickup, with two IBC [intermediate bulk container] tanks on it, approximately 2t of capacity. Some collect using a normal car," a collector said.

In the end, this may expedite the already underway consolidation of larger participants and bring some transparency to an industry previously maligned for its opacity.

UPCO purchases totalled 446,904t last year compared with 308,015t in 2019, while total sales increased to 249,946t from 245,400t. The amount processed by biodiesel plants increased nearly 23-fold to 189,717t from 8,345t, according to the MPOB.

By Amandeep Parmar