The government has cleared the way for the introduction of ethanol-blended petrol, approving a policy that allows fuel sold in Nepal to contain up to 10 percent ethanol. The move is expected to cut fuel imports and promote cleaner energy use, reported My Republica.
Following the Cabinet’s endorsement of the Order on Using Ethanol Blended Petrol, 2082 BS, the Nepal Oil Corporation (NOC) is now authorised to mix ethanol with petrol and distribute it in the domestic market, as per the media report.
Although the idea of adding ethanol to petroleum products has been discussed for more than 20 years, the plan had remained stalled. With implementation now moving forward, officials estimate the measure could significantly reduce petrol imports. Studies suggest that blending ethanol could lower daily petrol consumption by about 400,000 litres.
NOC Managing Director Dr Chandika Prasad Bhatta said the corporation would begin work on the necessary framework once it receives the formal procedures approved by the Cabinet. This includes developing standards for ethanol production and quality control. He said the new policy establishes a legal foundation for producing ethanol within Nepal and blending it into petrol for commercial sale.
According to Bhatta, ethanol use will help curb petrol imports while also offering environmental benefits. He noted that ethanol will not be imported and must be produced domestically, which could generate employment opportunities. “It will take time to finalise production and quality standards, but the direction is now clear,” he said.
Nepal currently imports all of its petrol from India, where ethanol-blended fuel has been in use for years. Officials estimate that introducing a 10 percent ethanol blend could reduce petrol imports by around 73 million litres annually. At current import rates from Indian Oil Corporation, this could translate into savings of more than Rs 6 billion each year.
Ethanol, a flammable fuel derived from agricultural materials, helps reduce vehicle emissions by lowering the release of harmful pollutants. Bhatta said its use supports environmental protection and contributes to reducing pollution levels.
As ethanol is produced from crops such as sugarcane, straw and dried grasses, the policy could also support the agricultural sector. Encouraging domestic production would provide farmers with an additional income stream, officials say, while reducing the country’s reliance on foreign fuel supplies and saving foreign currency.
Nepal consumes roughly 2 million litres of petrol each day, amounting to about 730 million litres annually. Blending ethanol directly into petrol at storage depots, once quality standards are ensured, would allow NOC to gradually reduce import volumes.
The current fiscal year 2025/26 budget has already outlined plans to introduce bioethanol blending as part of efforts to control pollution and lower fuel imports. While Nepal has approved a 10 percent blend, India is aiming for at least 30 percent ethanol blending by 2030 and currently sells petrol containing between 12 and 20 percent ethanol, depending on the region.
Industry stakeholders have welcomed the policy but stress the importance of careful implementation. They note that while the government is encouraging electric vehicles, ethanol blending must also be handled with proper attention to fuel quality, consumer safety and environmental impact.
