The National Electric Vehicles Policy is yet to be cleared by the Economic Coordination Committee (ECC) of the Cabinet and inter-ministerial committee; well-informed sources told Business Recorder . The federal cabinet recently cleared the concept of the policy in principle and not in entirety, including fiscal incentives, the sources added.

Giving the details, Prime Minister's Committee on Climate Change in its meeting held on May 17, 2019 directed the Climate Change Division to examine the practicality and financial viability of the "incentives package" to introduce electric vehicles in the country in consultation with all relevant stakeholders," and to place the policy on electric vehicles before the cabinet.

The Climate Change Division 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 EVP was developed and shared with the relevant stakeholders.

The Cabinet was further informed that the policy proposed an incentivized and phased approach for achieving the penetration targets for electric vehicles.

These phases include the following: (i) market development and public awareness through incentives and subsidies on electric vehicles, especially to the companies willing to set up EV related industry in Pakistan (year 1 and 2); (ii) fuel import bill substitution through targeted penetration of electric vehicles through local assembly and manufacturing (year 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).

Climate Change Division further stated that transportation accounts for over 40 percent of the airborne emissions that would need to be mitigated and adapted to harmful effects of climate change. It, was, therefore, imperative fro Pakistan to enter into the electric vehicle market at the earliest in order to fulfill its global commitments to bring down Green House Gas (GHG) emissions. It was stated that upon approval of the policy document, the industrial development and implementation aspects shall be firmed as per the mechanism identified in part 8 of the policy.

During discussion, the members of the Cabinet appreciated the draft policy and stated that it was a move in the right direction. Members also advised that the sponsors should try to avoid the pitfalls of the previous auto policies, which has resulted in very little localization and very high prices of cars in the country. A view was expressed that the sponsors should also look for solutions to the problems associated with lithium batteries which cannot be recycled.

After discussion, the Cabinet approved draft policy, in principle, with the direction that Climate Change Division will set up an inter-ministerial committee to finalise further details, including phasing/timeframe for various actions. The committee will also hold consultations with the existing automobile manufacturers' to address their concerns, if any, and incentives structure proposed in the policy be submitted for consideration of the Economic Coordination Committee(ECC) of the Cabinet.

The objective of the EV policy are as follows: (i) mitigate climate change through a reduction in emissions from transport sector;(ii) encourage auto and related industry to move forward local EV manufacturing;(iii) forge links with the global value chain for export potential of EVs and their parts;(iv) employment generation through green economy initiatives;(v) reduction in oil import bill; (vi) use of electricity in off-peak times for useful purposes; and (vii) develop affiliated industry as battery manufacturing, charging infrastructure etc.

The draft EV policy has set multiple targets including the sale of 100,000 electric cars, vans, jeeps and small trucks in the next five years. The Ministry aims to increase the number to 60,000 electric vehicles sold annually by 2030.

According to the long term targets set in the policy, production targets for vehicles in the two, three and four wheeler category have been set at 500,000 units with companies given access to the market within the next five years. By 2030, the target has been set at 900,000 units and by 2040 the target is 90% of sold vehicles.

The incumbent government had started work on EVs after Prime Minister Imran Khan directed the authorities concerned to ensure conversion of 30 percent of all cars running in the country into electric vehicles by 2030. The PML (N) government in its federal budget 2018-19 had reduced customs duty on the import of electric cars from 50 percent to 25 percent, in addition to exemption from 15 percent regulatory duty, and fixing import duty at 10 per cent on CKD.

Copyright Business Recorder, 2019