The Government of Nepal is preparing to implement a policy mandating a 10 percent ethanol blend in petrol, marking a significant shift toward cleaner energy and reduced fuel imports.
At a program organized by the Society of Economic Journalists-Nepal (SEJON) titled “Ethanol Blending Policy in Nepal: Opportunities, Challenges, and Implementation Strategy,” government officials and private sector representatives stressed the urgency of enforcing the long-discussed policy.
Minister for Industry, Commerce and Supplies Anil Kumar Sinha stated that the ethanol blending decision has now reached the implementation phase following nearly two decades of research and consultations. He announced that the directive—Order 2082—has been approved and will soon be published in the government gazette.
Describing the move as a step toward clean energy transition, Minister Sinha noted that blending 10 percent ethanol into petrol could cut Nepal’s annual petroleum imports by approximately Rs 6 billion, contributing to a reduction in the trade deficit.
He further explained that ethanol production would boost demand for agricultural products such as sugarcane, encourage better utilization of farmland, and stimulate domestic economic activity. However, he acknowledged several challenges, including establishing new industries, improving the business climate, ensuring security, generating employment, and securing sufficient raw materials. He also cautioned that expanding cash crop farming could pose risks to food security.
Govinda Bahadur Karki, Secretary at the Prime Minister and Council of Ministers’ Office, said that multiple commissions and advisory bodies had previously recommended ethanol blending, and the current government order aligns with those recommendations. He emphasized the importance of evaluating both the benefits and drawbacks of fuel alternatives, asserting that the policy serves the national interest. He also expressed confidence that future governments formed after the House of Representatives elections would continue the initiative.
Chandika Prasad Bhatta, Managing Director of Nepal Oil Corporation, stated that the long-planned program is finally moving toward execution and will not be reversed. He noted that full implementation could take between one and one-and-a-half years, as ethanol quality standards are yet to be finalized.
Joint Secretary Shivaram Pokharel from the Ministry of Industry revealed that the Cabinet approved the 10 percent ethanol blend in mid-January. Although commercial ethanol production has not yet begun in Nepal, the new order paves the way for domestic manufacturing. The government is expected to soon set a minimum price for ethanol, determine quality benchmarks, and invite bids from producers. After publication in the gazette, a price-fixing committee will select eligible companies based on production capacity.
Private sector representatives welcomed the move but stressed the need for a more supportive industrial environment. Ved Prasad Kharel, Chairman of Kian Chemical Industries Ltd., pointed to bureaucratic obstacles and called for stronger institutional mechanisms to facilitate investment.
Similarly, Shashikant Agrawal, Chairman of the Nepal Sugar Producers Association, highlighted that Nepal’s annual sugar demand stands at around 240,000 metric tons, while domestic production is approximately 200,000 metric tons. He suggested that the country could achieve self-sufficiency within two years, though he noted that the procedural and operational framework for ethanol blending remains unclear.
Consumer rights advocate Madhav Timalsina underscored the need for transparent regulations governing pricing, quality, and market monitoring. He warned that without clearly defined standards and effective oversight, the objective of reducing fuel imports through ethanol substitution would be difficult to achieve.
Overall, stakeholders agree that while the ethanol blending policy presents significant economic and environmental opportunities, its success will depend on clear regulations, fair pricing mechanisms, and strong implementation strategies.
