The government’s plan to add 10% ethanol to petrol, decided two decades ago, is about to be implemented. But, stakeholders have questioned the rationale behind the move, originally made to address rising petroleum prices, amid availability of alternative green energy sources.

The Ministry of Industry, Commerce, and Supplies aims to finalise procedures for ethanol blending within the next three months as part of its 'Reform Action Plan.'

Earlier this week, Minister for Industry, Commerce, and Supplies Damodar Bhandari emphasised the government's commitment towards ethanol strategy.
 
“The Regulations Related to Mixing Ethanol in Petroleum Products has already been developed,” Bhandari said at a programme in Kathmandu on Monday. “The price remains to be fixed; we will sort it out within a month."
The government would analyse the prices in neighbouring countries and fix the rates accordingly, the minister added. The plan is expected to reduce daily petroleum consumption by 200,000 kiloliters.

About a decade ago, Nepal Oil Corporation (NOC) had installed an ethanol mixing machine at the Amlekhgunj depot in preparation for this initiative. However, the machine has gathered rust after remaining unused for years, according to NOC officials.

Amid the government's renewed focus on ethanol, stakeholders question the feasibility of relying on imported sugarcane and corn for ethanol production, especially given the availability of alternative green energy sources like hydropower, hydrogen, and solar energy.

Lilendra Pradhan, president of the Petroleum Dealers Association, questioned the need for mixing ethanol, citing a significant decline in imports of  petroleum products. "The import has come down from 4,000 to 2,000 kiloliters daily in recent years,” said Pradhan.

Ethanol is produced from the molasses, a byproduct of sugar, and corn.

Further complicating the issue is the decline in domestic sugarcane production amid a substantial corn import.

Nepal imported corn worth over Rs 53 billion in the last three years and the majority of them were bought from India, according to the Department of Customs statistics. 

Corn prices are expected to surge in the coming days following India’s decision to increase the production of corn-based ethanol, according to Reuters reports. The move has turned Asia's top corn exporter into a net importer for the first time in decades. 

Similarly, sugarcane production has dropped by 270,000 tonnes over the past four fiscal years in Nepal, data from the Ministry of Agriculture and Livestock Development show.

Automobile dealers, too, questioned the need for using ethanol in the coming days.

Kapil Shiwakoti, who chairs the Environment Committee of the NADA Automobiles Association of Nepal, asked if it was really necessary to use ethanol if the country had to import materials worth billions annually to produce the product.

With growing demand for electric vehicles and  hydrogen emerging as a viable fuel option, the need for ethanol will decrease in the coming days, argued Shiwakoti, adding that focusing on hydrogen energy would be a more sensible approach.