Diesel-powered vehicles belonging to the ministries of transport, defence and plantations, industries and commodities, will begin using bio-diesel next year before the alternative fuel is introduced to the public, the Star on Wednesday cited Minister Peter Chin as saying.

The government had planned to start using bio-diesel only in 2007; "but because our plans are going very well, it seems that we can start way ahead of schedule," Chin, the plantations, industries and commodities minister, told the daily.

Chin said the government expected to save "hundreds of millions of ringgit" through cutbacks in oil subsidies by convincing Malaysians to switch to bio-diesel, a mixture of 5% palm oil and 95% diesel. Chin said eventually bio-diesel will have 20% palm oil and 80% diesel.

Malaysia imports most of its diesel fuel, but it's the world's biggest producer of palm oil. The government says that adding palm oil to diesel fuel would reduce consumption by about 418,000 liters (110,427 gallons) a year.

Subsidised fuel

Industries used 2.8 billion liters (0.74 billion gallons) of diesel last year, while others who qualified for subsidised diesel, such as public transport operators, consumed 5.56 billion liters (1.47 billion gallons).

The government has said that it cannot maintain the subsidies, which keep gasoline prices in Malaysia among the lowest in the region.

Palm oil is used mostly for cooking, but plantation owners sometimes use a mix of palm oil and diesel fuel to power tractors and trucks, and many say it does not affect the performance of the vehicles.

Ministry officials could not be immediately reached for comment.