Nepal can produce 100,000 litres bio-ethanol a day

Kathmandu, Oct. 27: Production of bio-ethanol in Nepal has been a story of an unsuccessful project as talks prevailed for more than two decades while mechanisms to fix the price and sign the purchase agreement couldn’t transpire. 

Approximately, 21 years ago in November 2003, the Ministry of Industry, Commerce and Supplies (MoICS) decided for the mandatory mixing of bio-ethanol in petrol used as vehicle fuel from January 15 that year as an initiative for the application of environment-friendly fuel. The Nepal Oil Corporation (NOC) had installed a machine for mixing ethanol in petrol at its depot in Amlekhgunj which never come in use. 

On December 15, 2003, the Government of Nepal (GoN) published the notice in the Gazette to implement the decision but even after 21 years, the government is yet to set the price to purchase it from the producers. 

Meanwhile, the discussion of producing bio-ethanol centred mostly around the sugar mills while proposals to extract it from jatropha couldn’t take off. The budget of Fiscal Year 2009/10 had announced to promote jatropha farming to produce bio-diesel as an alternative to imported petroleum fuel. 

Likewise, the Rural Energy Policy 2006 included a provision to identify the potential locations to produce bio-fuel and develop them. The thirteenth plan of the country (2013/14-2015/16) also pledged to formulate necessary policy to produce bio-fuel in Nepal while the Policy and Programmes of the GoN for FY 2014/15 announced to launch a fresh initiative to find a way to mixing bio-ethanol in petroleum products. The policy of the following year mentioned to promote private sector companies for the same. 

While there were initiatives from various institutions ranging from Nepal Academy of Science and Technology (NAST) to private companies in the past two decades to produce bio-fuel and bio-ethanol, sugar mills had repeatedly urged the government to facilitate them in producing bio-ethanol from molasses – a byproduct of the sugar mills.  The country also formulated a Bio-Mass Energy Strategy 2017 that again announced to partially substitute diesel and petrol import with the use of bio-diesel and bio-ethanol, identify land to cultivate fuel crop and provide it to the entrepreneurs, and promote the production of bio-ethanol from molasses.

Procedures to mixing bio-ethanol soon

The GoN had announced, a decade ago, to buy bio-diesel and bio-ethanol produced in Nepal even if it’s up to 10 per cent more expensive than the imported diesel and petrol and make necessary provisions for the same, provide financial concession, subsidy and concessional loans to the producers and refineries and conduct research and development work for the production, processing, quality control, and market promotion and expansion. 

After several years of these milestones, Minister for Industry, Commerce and Supply, Damodar Bhandari, had announced on September 9 this year to set the price of bio-ethanol within a month. 

According to the NOC, which has the responsibility to prepare the further strategy for the production and promotion of bio-ethanol and set the purchasing price of the product, the entire process is stuck at determining the price at which the NOC will buy it from the producers. 

Nepal Sugar Mills Association (NSMA) has said that the mills are okay with the NOC’s petrol purchasing price which is around Rs. 90 per litre. Minister Bhandari is also concerned about whether the price could be set in a way that would benefit all stakeholders – producers, NOC and consumers. 

The issue was in oblivion for several years and was resurfaced after a committee to suggest the mixing of ethanol in petroleum products led by Dinanath Mishra, Director General of the Nepal Bureau of Standards and Metrology, and included officials from MoICS, Nepal Academy of Science and Technology, NOC, Alternative Energy Promotion Centre, and Kiaan Chemicals Industries (KCI) Pvt. Ltd., submitted its report to the government in April 2024. 

Later on August 25 this year, Industry, Commerce, Labour and Consumer Welfare Committee of the Federal Parliament directed the government to advance the bio-ethanol production process, set the standards of the product, and sign purchase agreement from the producers in order to guarantee the market for them. 

The House Panel also directed the GoN and MoICS to implement the suggestions offered by various committes formed in the past and facilitate the domestic producers in producing bio-ethanol. 

Stakeholders are positive

After a week of the House Panel’s decision, the MoICS had expressed its commitment to formulate a procedure for mixing ethanol in petrol and implement it within the next three months. 

According to Dr. Chandika Prasad Bhatta, Managing Director of the NOC, the draft of the bylaws for Mixing Ethanol in Petrol is at the final stage. 

The NOC is currently moving ahead with the plan to mix up to 10 per cent ethanol in petroleum products which is possible, according to Pratibha Maharjan, Chief of Central Laboratory of the NOC. 

India and China have enacted policies to mixing 15-30 per cent ethanol in petroleum products while United States of America has a policy to mix 10 per cent, Brazil 27 per cent, India 15 per cent and China 10 per cent. Maharjan said that India has subsidized the production and transportation of bio-ethanol so Nepal should also adopt special polity to promote the production of this environment-friendly fuel. 

The NOC said the bio-ethanol that would be used in petroleum products should be of high quality – E-99 standards. Ethanol can also be produced from napier grass, corn husk, rice straw, corn, wheat chaff and bamboo. 

The sugar mills said that they currently have the capacity to produce at least 50,000 litres of bio-ethanol from the molasses and the Kiaan Chemicals Industry is also ready to produce bio-ethanol of same quantity. 

Director of KCI, Dinesh Poudyal, said that the company has conducted the feasibility studies to produce bio-ethanol from cassava and is ready to set up the plant immediately after getting purchasing guarantee from the NOC. 

“We need a mechanism that would maintain the buy-back guarantee of the ethanol produced by the industry. However, it seems that the NOC is still working on it,” he said. The government-formed committees have also suggested to implement Ethanol Purchase Agreement (EPA) after finalising the procurement parameters. 

Committee’s suggestion 

The Committee on making suggestions about mixing bio-ethanol in petroleum products had recommended that up to 10 per cent ethanol cold be mixed with petrol in Nepal and if the quantity of former is to be increased further studies are needed. 

Ethanol should be bought from the domestic industries, and such enterprises should be accorded national priority and they should be provided with the facilities given to the alternative energy projects, read the recommendations. 

“If the production of bio-ethanol goes above the set standards of mixing with petroleum products, the government should provide the facility to the industries to export it to the third countries,” read the committee report. 

It also said that concessions should also be provided to the farmers. 

The committee noted that the production and mixing of bio-ethanol would have positive impact on environment,  industries, import substitution and farmers.

Commercial farming of cassava

Kiaan Agriculture Research and Development Pvt. Ltd., a company promoted by the Non-Resident Nepalis (NRNs), is set to produce bio-ethanol from cassava (simal tarul) and has formulated a plan to promote its cultivation and buy back from the farmers.  

Established about four years ago, the company has conducted numerous discussions and interactions with the officials of the Ministry of Industry, Commerce and Supplies (MoICS) and Nepal Oil Corporation (NOC). 

Nepal has high potential in commercial cultivation of cassava while communities are collecting them from forests and farmers are growing them in a small scale. According to government and private sector studies, it can be cultivated in plains as well in the hills. There is no segregate data on cassava production in the country, the Ministry of Agriculture and Livestock Development (MoALD) estimates shows that the overall annual production of root and tuber crops is around 100,000 tonnes. 

KARD has proposed to promote the commercial cultivation of cassava in 99,000 hectares, primarily in and around Parsa district, stating that it would sign buy-back agreement with the farmers. Commercial farming of cassava can promote the use of fallow land created due to migration, foreign employment and menace of wild animals like monkeys and wild boars. About 60,000 hectares of cultivable land has remained fallow across the country. A kilo of cassava is sold at up to Rs. 70 at the Kalimati vegetable market during winter festival of Makar Sankranti. 

Director of KARD, Dinesh Poudyal, said that this cash crop can create employment in the villages and can motivate youth to stay at their own homes as the commercial farming of cassava can yield about Rs. 50,000 income in a month from one hectare. Globally, cassava is the third largest source of carbohydrate after rice and corn, and is widely used to produce alcohol, starch, glucose, and sabudana (tapioca pearl). Brazil, Nigeria, Thailand, India, China, Malaysia and other East Asian countries grow cassava.

According to Poudyal, in the first phase, cassava production is possible in 22,000 ha which will create employment opportunity for 71,000 farmers and indirect benefit 440,000 workers.