The production sources and technology for ethanol are divided into three parts: Ethanol prepared for blending into gasoline must be at least 99.5 percent pure.
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The Nepal Department of Standards and Metrology has made public the draft standards for ‘ethanol used for blending in motor gasoline (petrol). The production source and technology of ethanol have been divided into three parts. Since it is a highly flammable substance, it has been proposed to keep it in a safe, dry and leak-proof drum or tank. Similarly, the draft mentions that the details of the manufacturer, batch number, quantity, and type of production technology should be disclosed on each container.
Ethanol should be completely clean, transparent (colored) and free of any floating solids. The draft also mentions that mixing harmful substances such as methanol, turpentine, ketones and tar as ‘denaturants’ has been banned to protect the vehicle’s engine, rubber pipes and the entire fuel system. Ethanol prepared for blending in petrol should be at least 99.5 percent pure.
The department has also sought constructive suggestions and comments from consumers and stakeholders to make the draft more sophisticated, practical and scientific. The department's Deputy Director General and Spokesperson Prabhat Kumar Singh said that the draft of the standards has been made public for feedback, and it will be finalized after all the suggestions are received. 'We have made it public for suggestions and feedback, and we will finalize it after incorporating the suggestions received,' he said, 'The standards will be implemented only after the meeting including the Minister of Industry approves it.'
On 21 Deush 2082, the Council of Ministers approved the 'Order on the Use of Ethanol Blending in Petrol, 2082'. The order came into effect after it was published in the Gazette on 28 Falgun 2082, two months after the Council of Ministers approved it.
The government aims to create employment in the country by promoting the ethanol production industry based on domestic raw materials and reducing the import of petrol 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 provides that the Council of Ministers can change the proportion of ethanol in petrol. The order also provides that grains cannot be used as raw materials for ethanol production, stating that it will be a challenge to food security in the future.
Molasses obtained from the sugar industry, Napier grass, wasted agricultural and forest organic matter (biomass), straw, corn husks, wheat bran, rotten grains that cannot be used for food, cassava and yeast required for fermentation and other chemicals are the raw materials for ethanol production. The order also provides that the industry must produce ethanol in an environmentally friendly manner and sell the produced ethanol only to the Ethanol Corporation.
The quality of ethanol will be determined by the Nepal Department of Standards and Metrology. The corporation will have to purchase only ethanol that meets the quality determined by the department. The price of ethanol will be determined before the start of each fiscal year based on the suggestions of the recommendation committee formed by the government. The price of the previous year will remain the same until the price is determined. 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, at the specified place and time on a daily basis. If the industry violates the agreement, compensation can be demanded as per the prevailing law.
The responsibility of 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 committee formed for determining ethanol prices and recommending providing facilities to the industry will have the secretary of the Ministry of Industry, Commerce and Supplies as the coordinator. 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 raw material cost, factory overhead cost, administrative and operating expenses, etc.
Netra Prasad Subedi, Joint Secretary and Spokesperson of the Ministry of Industry, Commerce and Supplies, said that the price determination process will be taken forward after the Quality Department sets the standards. “The work of determining the quality is underway, after which the process regarding the price will be taken forward,” he said. The committee will also make recommendations on matters such as raw material cost, tax exemption, facilities, recognition of national priority industries, tax exemption on equipment imports, and concessions on fertilizers, seeds and electricity tariffs for farmers and agricultural cooperatives.
On 4 Jestha, the corporation had issued a notice that producers interested in producing and supplying ethanol could register applications with the corporation, stating that it would purchase according to quality and method. Nepal Oil Corporation spokesperson Manoj Thakur said that the corporation issued the notice after the order was published in the gazette. According to him, eight applications have been received for ethanol production and sale after the notice. He said that although some interested industries have applied, no further work has been done on it.
While Nepal is preparing to blend a maximum of 10 percent ethanol in petrol, India has already reached a 20 percent blend. India had started blending ethanol made from crops such as sugarcane and corn in petrol since the mid-2000s. Since then, its proportion has been continuously increasing.
After meeting the 20 percent blend target in 2025/26, India has implemented 20 percent ethanol blended petrol, or 'E-20', as the standard fuel at all petrol pumps. It has replaced the 10 percent blend (E-10) that was used earlier. However, some consumers are complaining that it causes engine wear, reduces fuel mileage and impairs vehicle performance.
However, the Indian government has issued a press release calling these complaints 'misleading' and 'social media propaganda'. In a statement issued last June, the government clarified that E-20 was brought to the market only after extensive testing and that it does not cause any damage to the engine. At a press conference last week, six carmakers said years of testing and servicing data showed no evidence of widespread damage to vehicles due to the 20 percent ethanol blend. However, carmakers have admitted that using E-20 could reduce fuel mileage by 3 to 3.5 percent because ethanol has a lower energy content, the BBC reported.
The government says the biofuel campaign aims to cut India's oil import bill, help farmers and reduce pollution. Ethanol burns cleaner than petrol and is produced domestically from crops such as sugarcane and maize.
India imports most of the crude oil it needs. The disruption to global oil markets during the Iran conflict has reinforced the argument for producing more fuel domestically.
India, which started blending 10 percent ethanol in petrol in 2021/22, has made the 20 percent (E-20) blend mandatory by 2025, five years ahead of schedule. But critics say the government has not given automakers enough time to adapt. According to Puneet Gupta, director of auto research firm Mobility Global, more than 75 percent of vehicles currently on Indian roads are not E20-compatible. A Thomson Reuters Foundation analysis also found that only about 20 percent of petrol vehicles sold in India over the past 15 years were ethanol-friendly.
