Nepal Government Mandates Ethanol Blending in Petrol, Outlining Production and Supply Rules

The government has implemented a new policy to use ethanol blended with petrol. The 'Order Regarding the Use of Ethanol Blended with Petrol, 2082,' issued by the Council of Ministers, was published in the Nepal Gazette on Friday.

Through this order, the government aims to promote industries based on domestic raw materials, create employment, increase the utilization of agricultural and biological resources, and reduce import dependency in the energy sector. According to the order, the Nepal Oil Corporation (NOC) must blend a maximum of 10 percent ethanol per liter of petrol, depending on availability. The order also allows the Council of Ministers to adjust this ratio as needed.

Raw materials that can be used for ethanol production include molasses, Napier grass, waste agricultural and forest biomass, straw, corn cobs, wheat chaff, cassava (simal tarul), spoiled grains, yeast (marcha), and other necessary chemicals. To prevent the misuse of food resources, a provision has been made prohibiting the use of food grains for ethanol production.

Industries must produce ethanol only from raw materials specified under prevailing laws, and the produced ethanol must only be sold and distributed to the Nepal Oil Corporation. This clarifies the policy to control the market and limit ethanol use to blending with petrol.

The order states that industries must adopt environmentally friendly measures in their production process, maintain quality standards, and be responsible for quality testing using their own laboratories. The NOC will also test the quality of every tanker before purchasing.

The price of ethanol will be determined based on the recommendation of a government-formed committee before the start of each fiscal year. If the price is not determined, the previous year's price will remain in effect. The determined price will be implemented starting from July 1st (Saun 1) every year.

The Nepal Oil Corporation must sign an agreement with the industries for the purchase of ethanol, and the industries must supply the required daily quantity of ethanol at the specified location and time. If an industry violates the agreement, compensation can be claimed according to prevailing laws.

The responsibility for ethanol transportation has been given to the industries. The order mandates that high safety standards must be adopted while transporting ethanol, which is highly flammable and water-absorbent. The Ministry will prepare and implement standards for safe storage, blending, and transportation.

The government has formed a committee to recommend the pricing of ethanol and facilities for the industries. The Secretary of the Ministry of Industry, Commerce, and Supplies will chair the committee, with representatives from the Ministry of Finance, Agriculture, the Department of Quality and Metrology, the Nepal Academy of Science and Technology, and the Nepal Oil Corporation as members.

As per the order, the committee will make recommendations on matters including raw material costs, tax exemptions, facilities, recognition as a national priority industry, tax exemptions on equipment imports, and subsidies on fertilizer/seeds/electricity bills for farmers and agricultural cooperatives.

It is expected that the implementation of this policy will increase the utilization of agricultural residue and biological resources, establish new industries, and create employment in rural areas. The effectiveness of its implementation will depend on industrial capacity, raw material availability, and government regulation.