KATHMANDU: Biomass energy entrepreneurs have expressed dissatisfaction with the government for continuously imposing new taxes on the sector, despite its potential to contribute to clean energy, reduce petroleum imports, and support rural employment.
Their frustration grew after the government announced a new 5% excise duty on biomass energy products in the upcoming fiscal year’s budget. Entrepreneurs, who had long been seeking relief from income tax and VAT, say the government has instead further discouraged the industry.
Speaking at a World Environment Day event jointly organized by the Nepal Environment Journalists Group (NEFEJ) and the Biomass Energy Entrepreneurs’ Association (BEAN), stakeholders voiced concern that existing biomass industries are at risk of closure due to unfavorable tax policies.
“Every time we ask for relief, a new tax appears,” BEAN President Aditya Parajuli stated, “We’ve been pleading for relief on income tax and VAT. Last year, when we tried to get income tax removed, VAT was added. This year, while attempting to reduce previous taxes, the government has introduced another new one.” He added that speaking out now feels risky, as it might trigger even more taxation.
Environmental expert Nabaraj Pokhrel, presenting a paper at the event, emphasized that biomass energy – derived from fallen leaves, shrubs, and organic forest residue – is a suitable solution for forest management, fire prevention, and clean energy production.
He argued that integrating biomass into national forest plans could yield economic returns while supporting conservation goals.
BEAN Vice President Kuber Mani Nepal added that biomass could significantly reduce Nepal’s petroleum imports and trade deficit, but has been largely ignored by policymakers.
Nepal highlighted that biomass can be produced at 20 times lower cost than hydropower, with higher thermal efficiency than LPG, petrol, or diesel – making it ideal for industrial use. Despite this, the industry’s production capacity remains at just 28%, due to unclear policies and neglect.
Nepal currently has 15 operating biomass companies, but with full capacity, they could produce around 100 million kilograms of solid biofuel annually. According to his estimates, Nepal loses over Rs 172 billion annually by not utilizing its forest resources for biomass energy.
Former Environment Minister Ganesh Shah called for a mandatory policy requiring industries to adopt biofuel, criticizing the government’s lack of awareness. He also urged market research to connect biomass producers with industrial and household consumers.
Dr. Ran Bahadur Thapa, Deputy Director of the Alternative Energy Promotion Centre (AEPC), stressed that clean energy is enshrined as a fundamental right in Nepal’s constitution. He noted that AEPC is working to promote biomass under its clean stove initiative but highlighted a lack of funding, suggesting subsidized loans as a potential solution.
British Embassy energy advisor Resha Pia said biomass is both environmentally and commercially viable, but poor awareness among policymakers and financial institutions remains a major hurdle. She emphasized the need to raise awareness about green finance and sustainable development.
Chandra Shekhar Karki, Chair of NEFEJ, concluded that policies that turn waste into wealth must be at the forefront of the government’s priorities to ensure sustainable growth.
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