The government's order on blending ethanol in petrol, 2082, has come into effect with its publication in the Gazette. The Cabinet meeting had approved the order on 21 Poush to reduce petrol imports. The publication in the Gazette came two months after the Cabinet meeting approved it.

The government aims to create employment in the country by promoting the ethanol production industry based on indigenous raw materials and to reduce petrol imports by blending ethanol in petrol. According to the order, Nepal Oil Corporation will have to blend ethanol up to a maximum of 10 percent per liter of petrol based on availability. The order also states that the Council of Ministers can change the proportion of ethanol in petrol. Molasses, Napier grass, agricultural and forest waste, straw, corn stalks, wheat bran, yams, rotten grains, yeast and other necessary chemicals are the raw materials for ethanol.

The order also states that grains used as food cannot be used as raw materials for ethanol production. The Corporation has made such an arrangement stating that it will be a challenge to food security in the future. The order also states that the industry should produce ethanol in an environmentally friendly manner and that the produced ethanol should be sold and distributed only to the Corporation.

The quality of ethanol will be determined by the Nepal Bureau of Standards and Metrology. The order also states that the Corporation should purchase only ethanol that meets the quality determined by the Bureau of Metrology. The Corporation will also purchase only after testing the quality of each tanker.

The government will determine the price of ethanol before the start of each fiscal year on the recommendation of the recommendation committee. In the absence of a price determination, the price of the previous year will remain. The determined price will be effective from 1st of July every year.

The Corporation will have to enter into an agreement with the industry for the purchase of ethanol. The industry will have to provide ethanol in the required quantity daily, at the specified place and time. If the industry violates the agreement, compensation can be demanded according to the prevailing law. The responsibility for transporting ethanol has been given to the industry. The order states that high safety standards should be adopted while transporting ethanol, which is highly flammable and water-absorbing in nature. The ministry will prepare and implement standards for safe storage, mixing and transportation.

The government has formed a committee to determine ethanol prices and recommend facilities for the industry. The coordinator of the committee will be the secretary of the Ministry of Industry, Commerce and Supplies, while representatives from the Department of Finance, Agriculture, Quality and Metrology, Nepal Academy of Science and Technology, and Nepal Oil Corporation will be members. While determining the price, the committee will determine the price based on primary cost, factory overhead cost, administrative and operating expenses, etc. 

According to the order, the committee will make recommendations on raw material cost, tax exemption, facilities, national priority industry recognition, tax exemption on equipment imports, concessions on fertilizers, seeds, and electricity tariffs for farmers and agricultural cooperatives. 

The work of formulating quality standards will be done by the Department of Metrology, said Chandika Bhatta, Executive Director of the Corporation. ‘The order has been published in the Gazette. Now the metrology department will do the work of setting quality standards, and the corporation will also be an assistant in that,' he said, 'The committee for the price and its authority are in the order. We will now send a letter to the concerned body to send the name of the representative.' Bhatta said that the committee will fix the price of ethanol per liter and recommend it to the government, and the price will be fixed according to that decision. Once the price is fixed, the corporation will also issue a notification stating how much ethanol it can provide at the fixed price for one year. 'Only producers, not sellers, will be able to apply for it,' he said.

According to Bhatta, no ethanol production industry has been established so far. He said that only a distillery plant should be established to produce ethanol from the sugar industry. Bhatta said that some industrialists are ready to set up industries to produce ethanol from yam. The corporation has stated that using ethanol-blended petrol will reduce pollution by 45 percent. Bhatta said that ethanol blending will start from there initially, as most petrol is purchased and sold from the Amlekhgunj depot.

The cultivation of Simal yam has been started in collaboration with 12 municipalities for raw materials, said Ved Prasad Kharel, chairman of Kian Chemical Industries Pvt. Ltd. ‘We have already purchased it for the establishment of the industry, now we will import the machine after the government fixes the price and creates an environment where investment is not wasted,’ he said, ‘It takes 6 months to 1 year to establish the industry.’