The federal cabinet which is scheduled to meet on Tuesday (today) will consider "half baked" National Electric Vehicle (NEV) Policy prepared by the Ministry of Climate Change (MoCC), which according to Cabinet Division does not fall in the domain of the Ministry, well informed sources told Business Recorder.
According to MoCC, Prime Minister's committee on climate change in its meeting held on May 17, 2019 directed that in consultation with all relevant stakeholders, MoCC examines the practicality and financial viability of the incentive package to introduce electric vehicles in the country and a policy on electric vehicles be placed before the cabinet.
Ministry of Climate Change, accordingly, initiated the process and held a number of consultative sessions with the stakeholders (both in the public and private sector) to formulate the National Electric Vehicle Policy. Consequently, a draft of the Electric Vehicle Policy was developed and shared with stakeholders.
The policy proposes an incentivized and phased approach for achieving the penetration targets for electric vehicles. The phases include the following: (i) market development and public awareness through incentives and subsidies on electric vehicles especially to companies willing to step up EV related industry in Pakistan (years 1 and 2); (ii) fuel import bill substitution through targeted penetration of electric vehicles along with local assembly and manufacturing (years 3 and 4); and (iii) reasonable local adoption and export of electric vehicles and its components through indigenous research, development, assembling and manufacturing (year 5 and beyond).
As per advice of the Cabinet Division, the summary was circulated to the relevant Ministries/ Divisions for input on September 19, 2019. Comments received from Ministry of Planning, Development and Reform, Ministry of Information Technology and Telecommunication, Ministry of Finance, Federal Board of Revenue (FBR), Ministry of Maritime Affairs, Ministry of Energy (Petroleum Division), Ministry of Science and Technology, Ministry of Communications, along with corresponding response from Ministry of Climate Change is also being shared with the Cabinet.
Inputs received from the Oil and Companies Advisory Council (OCAC), private sector, private sector professionals and the consensus developed by the stakeholders (automobile assemblers) in the meeting organised by the Engineering Development Board (EDB) has also been made part of the policy. Insiders in Ministry of Industries and Production informed Business Recorder that MoCC presented the draft policy on EVs to the Prime Minister, prepared independently by a team of LUMS, without involvement of relevant government body dealing with automotive sector, Pakistan Automotive Manufacturers Association (PAMA) and Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) However, upon reservations submitted by EDB/MoI&P citing concerns of the stakeholders, Cabinet Division issued an OM on August 27, 2019 stating that the policy formulation is MoI&P's domain. Thereafter, MoI&P constituted a committee under chairmanship of Additional Secretary and tasked EDB to carry out necessary consultations with stakeholders of 2 wheelers, 3-wheelers, cars and heavy vehicle segments and put up a draft for further consultation.
A recent meeting of stakeholders was held in PIDC Karachi on November 01, 2019 wherein PAMA agreed to discuss and forward its proposals regarding EV Policy at the earliest.
The source said proposals about concessional import of 20000 vehicles proposed in MoCC/LUMS report has been regretted across the board with following additional observations: (i) plug-in hybrid electric & pure hybrid vehicles involving lesser fuel consumption-Japanese Technology has not been addressed in LUMS report; (ii) emission reduction by 20% till 2030 agreed by Govt under Paris Agreement through Nationally Determined Contributions (NDCs) has been cited by MoCC without concrete measures proposed on obsolete vehicle retirement (existing fleet) which is major source of pollution; (iii) receipt of dedicated funding has been highlighted by MoCC but total amount, utilization for R & D or as an incentive to industry has not been elaborated; as adoption of EV technology in foreign countries involved significant government funding; (iii) standardization of EV Specific Equipment has been referred but WP 29 Regulations need specific interventions which have not been addressed; (iv) EV manufacturing, import of machinery for parts, manufacturing and export incentives have not been elaborated. In EDB's view, manufacturing regime of EVs and parts has been missed out completely; (vi) it will be difficult to justify heavy taxation in current fiscal year on automotive (revenue approach) verse huge incentives proposed for EVs as they will create an imbalance; and (vii) amendments /addition in SRO 656 required with respect to prerequisites i.e. ED paint facility etc. and necessary amendment required thereof has not been addressed in the report by MoCC/LUMS.
Auto sector experts argue that few recommendations are against spirit of ADP 2016-21, which includes: (i) import of up to 3 year old electric vehicles; (ii) government shall purchase 1000 all electric buses and trucks and will ask commercial operators to operate them for a concessionary period. Undue involvement of government is not advisable; (iii) customs duty on import of buses and trucks is 1% under Automotive Development Policy but no import has been made by any fleet operators; (iv) three-four companies approved under ADP 2016-21 include EV vehicle manufacturing in their business plan. For additional benefits, changes in existing policy will be required; (v) MoI&P's role has been proposed to specify EV types, models and other options that will be introduced and EDB's role to develop University-Industry Linkages; and (vi) entire manufacturing regime being facilitated by EDB under various SROs for automotive sector has been missed out.
Another auto sector stakeholder said that M/s Nissan Japan manufactured their first EV in 1947 and thereafter has improved it gradually. Nissan Leaf is their EV Flagship vehicle but it could not capture a significant share in Japanese Market despite having developed infrastructure in Japan. Stakeholders recommended phase wise introduction of EVs in Pakistan.
"Proposals of MoCC/LUMS report regarding development of infrastructure for EVs, electricity tariff announcement in Pakistan, conversion of CNG stations into EV charging stations, duty and tax incentives, registration etc. require consultations with Ministry of Energy, NEPRA, OGRA, FBR, various provincial registration authorities, local Governments etc prior to finalization of policy," he said, adding that FBR has strongly opposed interventions on duty & tax reduction proposed by MoCC in their comments.
Ministry of Industries and Production will build upon its report/EV Policy on the basis of stakeholders' comments, experience in policy formulation i.e. (AIDP 2007-12, and ADP 2016-21) and localization of parts and components. Initial draft of EV Policy will be submitted to MoIP in early December by EDB containing proposals on gradual electrification of automotive sector including 2-3 wheelers, cars and heavy vehicles including localization of their parts and components. An official stated that Ministry of Industries will propose in the cabinet that proper homework and announcement of policy and its monitoring is needed and in case the half cocked policy is announced, the policy will attract criticism by both vehicle manufacturers and part makers instead of being a success.
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