ISLAMABAD: An inter-ministerial meeting decided to constitute a panel of representatives from the Finance Division, NEECA, EDB, Ministry of Commerce, and the SBP to deliberate upon financing mechanisms for Electric Vehicles (EVs) in the country, well-informed sources told Business Recorder.
Prime Minister Shehbaz Sharif has also held a meeting on the new EVs policy, during which he was informed that MoI&P is planning to expand Electric Vehicles (EVs) to 30 per cent by 2030 for four-wheelers from current 2 per cent as currently total reliance is on import, mostly from China.
“We have shared our plans with the Prime Minister, according to which we are planning to increase the share of four wheelers by 30 per cent and 50 per cent for three/two wheelers by 2030,” sources added. Currently, 500 charging points are available nationwide as local production of EVs is limited.
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The EDB, sources said, has sought incentives to attract investment in EV manufacturing including import duty exemptions and development of Special Economic Zones (SEZs). Import duty exemptions apparently will not be available due to new program of the International Monetary Fund (IMF).
The issues related to EV Ecosystem policy and financing model came under discussion at a meeting in Ministry of Industries and Production (MoI&P) presided over by the Secretary Industries and Production , Saif Anjum.
The CEO EDB, highlighted that SIFC has assigned MoI&P as lead agency for the formulation of EV Ecosystem policy. He further clarified that EV Policy was initially devised by the Ministry of Climate Change in 2019, keeping in view the aspect of climate change. He further said that in-order to facilitate the manufacturing and encourage local production of EVs, tariff structure for EVs, their charging infrastructure and inputs were defined in 2020 and subsequently incorporated in Auto Industry Development and Export Policy (AIDEP) 2021-26. However, penetration of EVs in the market has been low due to insufficient low charging infrastructure across the country.
Ali Jawad, Advisor, EDB gave a detailed presentation on rationale of the proposed policy, overview of automobile local industry in Pakistan, current EV adaption and the proposed incentives. He also highlighted salient aspects of EV bikes scheme introduced by the Government of Punjab. He also presented a comparative analysis of EV policies in Pakistan, Indonesia, India, Vietnam, and Malaysia.
Managing Director, NEECA, Sardar Mohazzam compared various analysis on financial rates of EVs and combustion/ aspects gasoline rush lighted salient engines. He suggested various proposals for quick adaption of EVs including increasing the share of EVs in public procurement, fixing fleet retirement age, setting up fuel economy standards and introduction of blended finance/ revolving loans. He also stated that target of establishing 10,000 charging stations in the draft Policy may be reviewed.
He further suggested that the policy should cover indigenization and bulk purchase may be avoided. He noted that regulations relating to charging infrastructure will be revised by NEECA within next two weeks.
Muhammad Ashfaq, Joint Secretary, Ministry of Commerce argued that new incentives are not possible in the current macroeconomic conditions and emphasized reducing electricity rates. Further, the installation of charging stations may be made obligatory by NHA.
Mehtab Hussain from SBP suggested that already launched Prime Minister’s Youth Business & Agriculture Loan Scheme (PMYB&ALS) scheme may be considered for financing of EVs.
Additional Secretary-1, Ministry of Industries & Production, stated that OMCs are interested, however, charging infrastructure regimes are not yet formalised.
It was decided that a Sub-Group, led by Additional Secretary-1, comprising of representatives from Finance Division, NEECA, EDB, Ministry of Commerce and SBP will be constituted to deliberate upon financing mechanism for EVs.
The proposed next steps and deadlines are as follows: (i) finalization of financing structure with commercial banks and insurance companies by last week of September ;(ii) consultation with provinces for waiver of registration and token fee etc. and support in upscaling by last week of September ;(iii) approval of financing structure by the Economic Coordination Committee (ECC) and Federal Cabinet by first week of October 2024; (iv) shortlisting of EV manufacturers through open advertisement by first week of November 2024;(v) development of IT portal by second week of November 2024; (vi) invitation of applications through open advertisement by second week of November; (vii) E-balloting (including waiting list) by second week of December 2024; (viii) desk scrutiny and physical verification of successful candidates by banks by second week of January 2025; (ix) selection of DV by successful candidate by third week of January 2025; and (x) deposit of dues if any and handing over of EV by last week of January 2025.
The EDB has proposed New Energy Vehicle (NEVs) Fund, to be arranged through seed funding the GoP and proceeds from levy imposed on conventional vehicles.
Concessional credit for buyers, investment credits, awareness campaign, reduction in cost, Production Linked Incentive (PLI), technology transfer, charging infrastructure, shared testing facilities and National Centre for new energy vehicles are also part of the proposed policy.
The proposed immediate measures to enhance market penetration are as follows: (i) standards and regulations by NEECA, preferential tariff by NEPRA, facilitation by DISCOs;(ii) first priority should be Motorways, GT Road, N-65 and N-70; (iii) OMCs may be encouraged to use their CSR for this purpose; (iv) start up battery swapping banks for three wheelers in major cities; (v) transition to EVs in government procurement especially two wheelers; (vi) demand incentivizing - Punjab Government recently initiated scheme for subsidizing EVs; and (vii) reconsidering incentive structure to promote local manufacture and early adoption.
Copyright Business Recorder, 2024