How is subsidised cooking oil being illegally diverted?

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Subsidised Cooking Oil Illegally Diverted Through Mixing with Used Oil for Biodiesel Production

Subsidised cooking oil is being illegally diverted by irresponsible parties who mix it with used cooking oil for sale to biodiesel processing companies. This illicit practice exploits the price difference between subsidised cooking oil, which retails at RM2.50 per kg, and used cooking oil processed for the biodiesel industry, which can fetch up to RM4.20 per kg. Despite the government's monthly supply of 60 million kg of subsidised cooking oil, these misappropriation and misuse activities contribute to persistent shortages.
Mixing Subsidised Oil with Used Oil

Investigations have revealed that certain factories are involved in mixing subsidised cooking oil with used cooking oil. A recent raid in Kota Masai, Pasir Gudang, Johor, by the Ministry of Domestic Trade and Consumer Affairs (KPDNHEP) uncovered a factory that had been selling subsidised cooking oil to biodiesel processing companies. This operation resulted in the seizure of 13.6 tonnes of cooking oil that had been mixed with used oil, and one individual was detained.
Exploiting Price Discrepancies

The primary motivation behind this illegal diversion appears to be the significant profit margin available. Subsidised cooking oil is intended for personal consumption by the public, but by mixing it with used cooking oil, unscrupulous operators can create a product for the biodiesel industry that commands a substantially higher price. Information indicates that processed used cooking oil for biodiesel can be sold for as much as RM4.20 per kilogram, while the subsidised product is capped at RM2.50 per kilogram.
Impact on Supply and Government Measures

This widespread abuse of subsidised cooking oil directly contributes to the recurrent shortages experienced by consumers, even with the government's substantial monthly allocation of 60 million kg. In response to such misappropriation and misuse, KPDNHEP has taken action by revoking the licenses of nine subsidised cooking oil manufacturers and suspending the operations of 15 other companies pending further investigation. The ministry is actively seeking comprehensive solutions to address this ongoing issue.

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How is subsidised cooking oil being illegally diverted?

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