Nepal has taken a significant step toward reducing its fuel import bill by allowing the blending of domestically produced ethanol into imported petrol. The Cabinet recently approved an order enabling the Nepal Oil Corporation to mix up to 10 per cent ethanol, or E10, into petrol, reviving a policy discussed for nearly two decades.
The initiative is expected to save over Rs6 billion annually by cutting roughly 130 million litres of petrol imports each year. Officials say the move could also create jobs, boost sugarcane cultivation, and energise local industries while promoting cleaner fuel use. Ethanol production will rely on by-products such as molasses, Napier grass, agricultural residues, and unused biomass, explicitly excluding grains used for food.
Twelve domestic sugar mills could collectively produce around 360,000 litres of ethanol daily if sufficient raw materials are available. Some mills already have the required distillery facilities, while others will need significant investment to expand or upgrade production. A committee will set ethanol purchase prices, with final approval by the Cabinet, and strict quality control will be enforced to maintain fuel standards.
Nepal follows India and other nations in adopting ethanol blending to reduce oil imports and carbon emissions. While the policy promises economic and environmental benefits, experts caution that domestic production capacity is limited, and ensuring consistent supply could be challenging. Public awareness campaigns and clear monitoring mechanisms will be essential to address consumer concerns about fuel efficiency, vehicle performance, and quality.
Officials emphasise that the programme is designed to use renewable local resources without compromising food security. By incorporating ethanol into petrol, Nepal aims to gradually reduce dependence on imported fuel, strengthen the domestic economy, and join the global shift toward cleaner, blended fuels.
