KATHMANDU, Feb 22: The government is preparing to implement a policy to mix 10 percent ethanol in petrol in Nepal.
At a program organized today by the Society of Economic Journalists-Nepal (SEJON) on “Ethanol Blending Policy in Nepal: Opportunities, Challenges, and Implementation Strategy,” representatives from the government and private sector emphasized the need to implement the ethanol blending policy without further delay.
Minister for Industry, Commerce and Supplies Anil Kumar Sinha said the decision to mix ethanol in petrol has reached the implementation stage after extensive study and discussion. Highlighting that research on ethanol blending has been ongoing for nearly two decades, he said, “After around 20 years of study and deliberation, the order to blend ethanol in petrol—Order 2082—has been approved and will soon be published in the gazette for implementation.”
Minister Sinha described ethanol blending as an important step toward clean energy. He claimed that blending 10 percent ethanol in petrol could reduce Nepal’s annual petroleum imports by around Rs 6 billion, helping to lower the trade deficit.
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He added that ethanol production would increase demand for agricultural products such as sugarcane, expand the use of farmland, and stimulate the domestic economy. However, he acknowledged challenges in establishing new industries, improving the industrial environment, ensuring security, creating jobs, and producing raw materials. “Opportunities come with challenges. Expanding cash crop-focused agriculture may also pose risks to food security,” he said.
The minister noted the potential for foreign investment in this sector, emphasizing that competition should be healthy, not unfair. He said ethanol prices should be lower than petrol to make it competitive, with procedures for pricing expected soon.
Govinda Bahadur Karki, Secretary at the Prime Minister and Council of Ministers’ Office, said multiple commissions and advisory committees had previously recommended ethanol blending in petrol, and the government’s order follows those recommendations. He emphasized that all positive and negative aspects of fuel should be analyzed and said ethanol blending is in the national interest. He also expressed confidence that future governments formed after the House of Representatives elections would continue this policy.
Chandika Prasad Bhatta, managing director of Nepal Oil Corporation, said the long-prepared program is now entering the implementation stage and would not be reversed. He added that full implementation may take 1 to 1.5 years, as quality standards for ethanol still need to be finalized.
Joint Secretary Shivaram Pokharel at the Ministry of Industry, said the Cabinet decided in mid-January to mix 10 percent ethanol in petrol. He noted that commercial ethanol production has not yet started in Nepal, but the order opens the path for production. The government will soon recommend a minimum price for ethanol, set quality standards, and invite bids for production. After the gazette publication, a price-setting committee will select companies based on production capacity.
Private sector representatives said that while raw materials for ethanol production are sufficient, a conducive environment is needed for industry establishment. Ved Prasad Kharel, Chairman of Kian Chemical Industries Ltd., highlighted bureaucratic hurdles and called for stronger government mechanisms.
Chairman of the Nepal Sugar Producers Association Shashikant Agrawal said annual sugar consumption in Nepal is around 240,000 metric tons, while domestic production is only about 200,000 metric tons. He added that Nepal could become self-reliant within two years, but the procedures and implementation plan for ethanol blending remain unclear.
Consumer rights activist Madhav Timalsina emphasized the need for clear regulations on price, quality, and market supervision. He warned that without proper quality standards and effective market regulation, the goal of import substitution through ethanol could not be achieved. “Price, quality, and measurement standards for ethanol must be clearly established,” he said.
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