The government of Nepal has introduced a new policy allowing ethanol to be blended with petrol in an effort to reduce fuel imports and promote industries based on domestic agricultural resources, Nepal News reported.
The directive titled “Order Relating to Mixing and Bringing Ethanol into Use in Petrol, 2026” was published in the official gazette on Friday after receiving approval from the Cabinet.
Under the new rule, the Nepal Oil Corporation will be allowed to blend up to 10 percent ethanol in every litre of petrol, depending on availability. The Cabinet may revise the blending percentage in the future if required.
Ethanol can be produced from a range of materials including molasses, Napier grass, agricultural waste, forest biomass, straw, corn stalks, cassava and damaged grains. However, the policy clearly bans the use of edible grains in order to avoid affecting food supply.
Producers will be required to supply ethanol only to the Nepal Oil Corporation, which will check the quality before purchasing it. The price of ethanol will be fixed every year based on recommendations made by a government committee and will come into effect from the first day of each fiscal year.
Industries producing ethanol will also be responsible for transporting it under strict safety rules, as the fuel is highly flammable.
The government has also set up an inter-ministerial committee to recommend pricing and possible incentives. These may include tax relief and support for farmers supplying raw materials.
Officials say the policy could help expand the use of agricultural waste, support rural industries and generate employment, although its success will depend on the availability of raw materials and the capacity of industries to produce ethanol.
