KATHMANDU: The government has introduced a policy allowing ethanol to be blended with petrol, aiming to reduce fuel imports and encourage industries based on domestic agricultural resources. The directive titled “Order Relating to Mixing and Bringing Ethanol into Use in Petrol, 2026” was published in the Gazette on Friday following approval by the Council of Ministers.

Under the new rule, the Nepal Oil Corporation can mix up to 10 percent ethanol per liter of petrol, depending on supply. The Cabinet may revise the blending limit if required.

Ethanol can be produced from materials such as molasses, Napier grass, agricultural residues, forest-based biomass, straw, corn stalks, cassava, and damaged grains. The policy bans the use of edible grains to avoid affecting food supplies.

Producers must supply ethanol exclusively to the Nepal Oil Corporation, which will test quality before purchase. Prices will be set annually based on recommendations from a government committee and will take effect from the first day of every fiscal year each year.

Industries will be responsible for transporting ethanol under strict safety standards because the fuel is highly flammable. The government has also formed an inter-ministerial committee to recommend pricing and incentives, including possible tax relief and support for farmers supplying raw materials.

Officials say the policy could expand the use of agricultural waste, promote rural industries, and create employment, although its success will depend on raw material availability and industrial capacity.

(RSS)