Govt. Electric Vehicle Policy in jeopardy

By Nasir Mahmood

The PTI government is keenly interested to introduce Electrical Vehicles (EV) in Pakistan while its hierarchy is unaware of the repercussions involved in such a major policy tilt without any preparation or spade work.

According to analysts it is very important to understand the role of consumer in this kind of phenomenal change and this requires the utmost confidence to be maintained by the consumer who will make it or break it. Therefore, his satisfaction is quite necessary in all stages right from the purchasing of EV till smooth and hassle-free usage of power banks.

In view of the present literacy level, and dominant ratio of urban population, it is necessary to hold continuously well effective consumer awareness program which compels them to accept this paradigm change. Presently due to high rate of interest almost the leasing facility is not being considered as a good mode of financing and on top of it, due to recent revision in taxes and duties structure, the price of the FFVs are touching the sky. Therefore, it is difficult to afford the leasing facility even by the upper middle class.

The running cost of EV’s is one third of (FFV) fossil fuel vehicles. The capital cost is quite high hence the analysts have proposed to give maximum benefits by imposing minimum duties and taxes to make it affordable in the general public. Initially this relaxation will be given to CBU but after 2-3 years, this exemption should be offered to CKDs only and simultaneously there will be no relaxation of duties and taxes on CBUs. As a result this will encourage local auto manufacturers, assemblers and vendors to promote the industry as a whole and adhere strictly to deletion program.

This burden of giving exemption or ease of duties structure can be offset easily with the saving made in oil imports plus payment in respect of unutilized capacity of power generation. In the year 2018-19, Rs650 billion were paid as a capacity charged payment to the power producing units which will be expected to reach Rs1500 billion by 2025. Presently our country imports oil of 13 billion dollars annually, which will be reached to 30 billion US dollars by 2025. If we utilize 42 TWh of unutilized energy to charge 500,000 EVs which can bring capacity payment down by Rs21 billion and will also generate revenue of 31.5 billion with a net profit of Rs52.5 billion to the economy. 1000 MW energy is required to fulfill the demand of 500,000 vehicles by the year of 2025.

Presently it has been claimed that the running cost of EVs is 30 percent in comparison to FFVs, therefore greatest care is required in future to maintain this parity to achieve the aggressive goal of induction of EVs. In case of any notable rising trend occurs; the burden will be absorbed by the government through subsidiaries to maintain the confidence of end users, assemblers and vendors. Earlier we had a very bitter experience on CNGs when it was brought in it had a 150 percent absolute price difference which has now shrunk to only 38 percent due to Govt.’s lust for higher earnings through taxation, leaving no charm for any consumer.

Presently it is very difficult to sustain any business on available margins which are directly dependent on cost of doing business. Therefore, in general for any industry and in particular for automotive industry, special concession should be granted to operate with minimum cost of doing business. Since EVs are highly capital intensive and need a modern technology to cope up with the modern world. It needs heavy investment by the assemblers, manufacturers, vendors and lastly consumers. Therefore, a nominal bank rate should be allowed specifically for EV industry.

This is a new technology based on electronics and electrical engineering. Therefore, government should ensure the schedule of transfer of technology and adherence of deletion program to support the local manufacturers and vendors. This is the foremost important point to develop a vendor industry as a whole for economic prosperity and it may be noted that presently it is not taken care by any authority or ministry as a result we normally assemble the components and do not get involved in manufacturing of same.

To promote and develop infrastructure of power banks, government has to give concessions/ exemptions in duties and taxes particularly to PHEVs charging stations so people will feel relax while charging. The charging infrastructure may need to be fixed first in major cities on major roads across the country and then spread to whole country according to priorities to highways and motorways.

It is necessary to control and monitor electricity bill and line losses to ensure accurate billing. Initially, the charging is slow and is home based which takes 8-10 hours to complete charge the battery of BEVs and half of the time is required to charge PHEVs. There should be faster charging banks which require some more electricity with lesser times. Such stations can be made at workplaces, hospitals, malls and other public areas.

Then we need commercial charging stations that provide fastest charging but require highest quantities of electricity suitable for commercial transportation. To encourage entrepreneurship in this area Public-private partnership is necessary. This will promote availability of charging stations at offices, homes, hospitals etc. To promote EVs continuous process of research and development should be undertaken by the government in close collaboration with assemblers/manufacturers/vendors and their principle technical teams to cope up with the modern technology and innovations.

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