High cost of electricity is a major reason that investors are still reluctant to set up charging infrastructure for electric vehicles (EVs) in Pakistan, while the cost required to set up an EV charging facility also makes it an unviable business option, transport industry insiders told Business Recorder.
Despite there being efforts from the government side as well as EVs making inroads, there are only eight EV stations in the country, according to Electromaps that globally tracks EV stations among other services to EV owners.
Three EV charging stations are in Islamabad; two in Lahore and one each in Karachi, Hafizabad, and Sargodha.
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A reliable industry source explained that none of these charging stations have broken even let alone having earned any profit.
The source blames this situation on the gap between electricity’s buying and selling prices.
“Charging stations located in urban areas buy electricity at prices ranging between Rs90 and Rs105 per unit but their selling price for a unit of electricity ranges between Rs75 and Rs100,” the source said, requesting that his identity be kept secret.
Similarly, the source added, charging stations located on motorways buy electricity at Rs160-Rs170 per unit but they sell the same unit at around Rs150.
Dr Naveed Arshad, associate professor and a co-director of the LUMS Energy Institute, voiced the same complaint.
“NEPRA regulates EV charging stations just like Oil and Gas Regulatory Authority (OGRA) regulates petrol stations,” he said, explaining that both buying and selling prices of electricity at these stations, as well as their profit margins, are set and controlled by the NEPRA.
“Under this regulatory regime, charging stations can only charge the electricity price set for them by the NEPRA which ranges between Rs50 and Rs55 per unit in spite of the fact that these charging stations themselves buy electricity at Rs70 to Rs80 per unit,” said Arshad, who is also CEO Neobolt, a battery swapping energy infrastructure enterprise aiming to expedite Pakistan’s adoption of electric vehicles and transform the way people utilise urban mobility.
“Such irrational pricing will turn away potential investors,” Arshad warned.
A NEPRA official, however, dismissed these complaints, saying the electricity tariff for EV charging stations had been set after a strenuous effort and proper calculations with all the stakeholders.
“Under this tariff regime, electricity’s input cost per unit cannot be more than its output cost per unit,” he said.
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In simple words, according to him, the price of electricity purchased from the power companies by EV charging stations must be lower than the price they can charge from their customers so that their business remains profitable.
He also claimed that the costs being quoted by the complainants were exaggerated.
“The minimum per unit price to be paid by charging stations has been set at Rs45 but they have been allowed to charge Rs25 above this buying price. This means that they can sell a unit of electricity to their customers at Rs70,” NEPRA official explained.
Additional challenges
Another financial challenge facing the proprietors of charging stations is that most EV owners prefer to charge their vehicles at their homes where they have to pay a low ‘domestic’ tariff rather than using charging stations where they have to pay a much higher commercial tariff, the source explained.
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“The EV segment of transport is also very small as compared to the gasoline segment which means that charging stations are not getting enough consumers to achieve economies of scale. High initial investment needed to set up an EV charging facility is also a big challenge facing this segment.
“It is puzzling how the government on the one hand wants to increase electric vehicles in the country but on the other hand is taking measures that discourage investment in their charging infrastructure,” the source said.
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