Economics of biodiesel production in the context of fulfilling 20% blending with petro-diesel in Nepal

The dependency on imported petro-diesel along with the escalating price are adversely affecting the national economy of Nepal. As an alternative fuel, prospects of biodiesel production for partial substitution of petro-diesel are felt necessary to reduce the dependency on fossil fuel. This article outlines the economics of biodiesel production in the country. Three different cases are developed for the economic analysis in the chain of biodiesel production, which are aimed to overview the influences of yield of plant, cost of cultivation, and price of raw oilseeds to the production cost of biodiesel. The study concludes that the biodiesel production is economically viable with a plant yield greater than 2 kg/plant and with the price of oil seeds lower than 0.22 USD/kg, which has a positive return on investment. With the yield lower than 2 kg/plant, the production cost of biodiesel cannot compete with the current price of petro-diesel.