Govt finally promotes electric vehicles to curb petrol import bill

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Keeping in view a broader vision on changing landscape of auto sector in the world, Prime Minister Imran Khan on May 18 chaired a meeting on climate change and decided to introduce electric cars and electric bikes by setting up electric vehicle plants for the first time in the country.

Adviser to Prime Minister on Climate Change Malik Amin Aslam briefed the premier on the climate change. The prime minister ordered the authorities concerned to ensure conversion of 30 per cent of all cars running in the country into electric vehicles by 2,030. However, it looks an ambitious target. Mr Aslam said the government planned to introduce electric cars in the country by 2,030 and that the move would have far-reaching impact on the country’s environment. He said electric vehicle policy would be devised shortly under the direction of PM in order to control petrol import bill.
“Most countries are opting for electric cars across the world and Pakistan is far behind in it and once introduced in the country, electric vehicles will help save Rs 2 billion worth of oil imported into the country besides reducing the country’s air pollution,” he said.

The government wants to see export of electric vehicles from Pakistan within the period of five years. The adviser said that smoke emissions from vehicles were a major source of air pollution in the country and it contributed heavily to smog during winter season in Punjab, especially in Lahore.

He said that electric cars would help lessen dependence on LPG and compressed natural gas stations, most of which were shut down because of gas closure on different days especially in winter in Punjab and these stations would be converted into charging docks for electric cars.

Referring to the smog issue in Punjab during winter, he said that last year crop burning, one of the major sources of smog in Punjab, was banned. This year, too, he said, crop burning would be prohibited and the government planned to purchase the crop waste to sell it to industrial units.

He also announced plans to launch Green Rickshaws in the country and for this purpose the government was holding talks with different stakeholders.

Chairman Pakistan Electric Vehicles Manufacturers Association, Mohammad Sabir Sheikh said the government should not use the word “electric cars” but also cover electric vehicles, electric bikes, electric commercial vehicles, electric tri wheelers, and electric heavy vehicles especially made for academic institutions. Motorcycle population is far higher than other vehicles due to its massive usage. The government should focus more on electric two wheelers, he said.

Most of the two wheeler units are already closed and they would not need more time to start assembly of electric bikes if they are encouraged with tax incentives and friendly policies, he said. Vendors are also equipped with expertise to develop electric bike parts as these bikes require only body parts and batteries rather than engine. Vendors are capable for making electric bike parts, he added.

Sabir said electric bikes will save millions of dollars import bill of petrol besides ensuring pollution free environment.
He said the government should reduce customs duty on CKD parts of electric bikes and remove hurdles at the bureaucracy level especially in Engineering Development Board, Board of Investment and Pakistan Standard and Quality Control Authority. “One of the main advantages of the electric bikes is that it cannot be used in street crime activities because it lacks torque and thrust as compared to petrol driven bikes,” he said.

The government remains committed in introducing alternative energy in all walks of life with a view to reduced dependence on consumption of fossil fuel. In this regard, the government intends to continue its drive and the following proposals are being made. In last year’s budget 2018-2019, the government had incentivized electric vehicles. To promote usage of electric vehicles, which are environment friendly, an enabling fiscal environment for its related infrastructure is necessitated. The government proposed that 16 per cent customs duty on charging stations for electric vehicles may be withdrawn.

Custom duty on import of electric cars was proposed to be reduced from 50 per cent to 25 per cent in addition to exemption from regulatory duty of 15 per cent. Import of CKD kits for assembly of domestically produced electric cars was proposed at 10 per cent. Sabir Sheikh said the government should support with full incentives to promote electric vehicles as the world is fast moving towards electric vehicles as auto parts vendors have the capability to produce anything barring engines which electric cars and bikes do not need.

He said countries like Germany and China are doing a lot of work on electric vehicles. Germany plans to get rid of fossil fuel vehicles completely by 2,022, while other European countries will follow suit by 2,025. India has also set the deadline by 2,030. “Where Pakistan will stand if it has not done anything right now seriously,” he added.

He urged the government to promote electric scooters along with all kinds of vehicles. Electric vehicles can be made completely in Pakistan if there’s a will. Sabir said despite too many incentives, nothing serious had been done in the last few years in electric vehicle segment. Few investors tried to bring in imported electric cars and bikes but could not get a big response as infrastructure is missing coupled with high prices.

He said existing Japanese car assemblers had not hinted any sign for introducing electric vehicles in Pakistan as they are already enjoying monopoly in petrol and diesel driven vehicles. However, Toyota and Honda have been making serious efforts in this regard. He said existing assemblers have been literally enjoying in Pakistan especially on price hike issue.

They have raised car prices by over 10 times in the last 14 months despite achieving up to 70 per cent localization but no governments have ever seriously taken this issue. When existing assemblers are making fun of prices under the umbrella of rupee-dollar parity then one cannot expect price stability from the new entrants owing to very low localization.
However, brisk sales of existing local assemblers amid frequent price hikes boosts the morale of new entrants that price hike is not the main issue rather than giving better choice to the consumers which had been missing owing to monopoly of only three Japanese assemblers.

Another development has emerged in the two wheeler segment as the government is considering introducing special low-grade petrol for motorbikes in the country, apparently as a solution to allow obsolete refineries to continue operations and provide a cheaper option to the owners of two-wheelers amid rising petrol prices.

Prime Minister Imran Khan had directed his special assistant on petroleum Nadeem Babar to examine the proposal and practical matters to introduce 80-82RON petrol for two-wheelers. The proposal is reported to have been floated by Dr Abdullah Malik, an official of the Oil and Gas Regulatory Authority (Ogra).

The move appears surprising as Pakistan had already switched over to 92RON from 87RON two years ago while 30 years back, the country was using 82RON. Higher Research Octane Number (RON) means cleaner and better quality petrol.
Low quality petrol import would definitely lower import bill of over one billion dollar spent on petrol import.
Two wheelers consume over 60 per cent of petrol out of total sales of petrol. Pakistan Automotive Manufactures Association (PAMA), while opposing the move, said the Association was told that majority of domestic refineries, having outdated facilities, were not able to efficiently produce higher RON fuels due to which they had to use an additive to fuels to increase RON which was imported.

If low RON fuels are introduced then import bill of those additives may be reduced. It will also help use unutilised capacity of oil refineries. This policy initiative of 80-82RON will be a huge step backward in a long-standing national goal of achieving international standards, PAMA said. Commenting on this, Sabir Sheikh said majority of consumers in Pakistan are using decades old bikes so there would be no problem if they get low quality petrol at reduced rate than the current petrol price of Euro II fuel.

He said for the last few years – all the assemblers had been producing EURO II bikes which require 92RON petrol which is easily available. There will be no big problem if low quality petrol is introduced for decades old bikes.

Published in Automark Magazine’s June-2019 printed edition

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