Bio-ethanol production gains momentum after 2-decade hiatus
Kathmandu, Oct. 26
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.
Published in The Rising Nepal daily on 27 October 2024.
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