September 23, 2021, Thursday
Nepal 1:37:26 pm

EV friendly Budget of FY 2078-79, but still more to do

The Nepal Weekly
June 23, 2021

The Nepal Weekly | June 22, 2021 | Opinion

By Purna N. Ranjitkar

Finance Minister Bishnu Prasad Paudel, on May 29, 2021, had announced budget of Fiscal Year 2078-79 (mid July, 2021 to mid July, 2022). The size of the budget is NRs 1.647 trillion. The business community was proposing for lower taxes on commodities mostly used by low income people and development activities. Their priority is reduction of tax rates on raw materials for industries and infrastructural development as well. Financial provision was another important issue to address for the business community to better come back from critical situation created by COVID pandemics mainly.    

A segment of business community, professionals and campaigners who take electric vehicles as an important tool for reducing climate change effects, reducing air pollution levels, reduce use of fossil fuels and consume electricity generated in the country were putting voice on revision of tax policies on import of electric vehicles. Some non-government organizations and media were also carrying the views and opinions of stakeholders who really want to see changes through intervention of electrical transportation in the country. The opinions were aimed to reinstate the provisions of previous tax policies which remained effective before FY 2077-78. So as campaigners were demanding for electric transportation for public services and workable environment for conversion of old fossil fuel vehicles to electric drive.                    

As a matter of fact, electric transportation in the country to promote has been a priority in the papers for many years. A number of plans have been formulated so far. But implantation of policies and plans did not bring expected results. The users and entrepreneurs did not find workable situations within the government work plans and lack of suitable legal provisions. Therefore the progress rate is just nominal in terms of the number of vehicles introduced and uses.

Electric transportation has been recognized as a tool to minimize vehicular pollutions around the world. Nepal also had expressed commitments in global conventions, charters and agreements. This is a need for the country from the point of view of minimizing loss and damage of people in terms of air pollution causes diseases, use of electricity generated by renewable energy technologies mainly hydropower and minimise consumption of imported of fossil fuel.

The policies for EV promotion should be very practicable to users and entrepreneurs. The systems should be well developed so as EVs for public transportation, private uses of four-wheel vehicles, three-wheel and two-wheel vehicles.

The budget announcement had made the EV lovers relived as the tax provisions are made ‘favourable’. The provisions are more similar as expected to be back to ‘before the budget of FY 2077-78’.

According to the announcement, the electric vehicles (mini car, hatchback, sedan, Van, SUV, Crossover) are categorised as up to 100kW, 100kW to 200 kW, 200 to 300kW and above 300kW and tax rate applicable is 10%, 15%, 30% and 40% respectively while excise duty will be 0% to all category. Value added tax (VAT) on all categories is applicable at the rate of 13%. Similarly Road tax (RDT) is 5% to all categories.

The tax rule of electric buses, mini buses and micro buses for public transportation are unchanged. Likewise three wheeled and two wheeled electric vehicles also remained unchanged.

The budget announcement had included government priorities on operating electric buses in the Kathmandu Valley and some selected cities. Operationalisation of intercity electric bus service is also provisioned in the budget. The Government funding for installation of 500 additional EV charging stations in the Kathmandu, some selected cities and in highways is also mentioned.

The financial document also spoke on a policy to replace petroleum vehicles with electricity driven by the year 2088. Similarly, in order to EV manufactures to come in, the government has declared that it would provide land for vehicle assembly plants and expects to lure the top ten ranked EV producers in the world.

The other part of the EVs in the budget is commitment on develop provisions to pave way for conversion of old fossil fuel vehicles to electric drive. A workable legal provision for conversion has been an agenda that EV campaigners are advocating for years. This provision could help old but workable vehicles to turn into electric drive. This can provision can be instrumental in contributing to reduce import of vehicles to some extent, reduce burning of fossil fuel and consume clean energy generated in the country.

Electric transportation in Nepal may be categorized as (1) Cable car, ropeway, electric train, metro, monorail, (2) bus, mini bus, micro bus, (3) mini car, car, sedan, van, SUV, crossover, (3) three wheelers, (4) two wheelers and (5) electric bicycles.

Notably, the budget is much focused on electricity driven mini car, car, sedan, van, SUV, crossovers. Actually, the government policy should be more attentive to make EVs for public transportation the first priority. Funding for such important and needful arrangements should be a priority. Likewise infrastructure for this segment should be taken into consideration so as large number of population could use buses, mini buses driven by electricity. Similarly legal provisions for electric vehicles for taxi cars and ride sharing like rental service should be made user and operator friendly. Part of Pollution Control Fund, the tax taken on every litre of petrol and diesel has been more than NRs 13 billion now might be utilized to promote electric public transportation system in the country.    Therefore there are still some more scopes that the experts, professionals and campaigners should consider on influencing the policymakers to take seriously. That means benefits to a segment of traders and users should not be taken as mission accomplished, but still more to do to get the goal where a large number of population will be benefitted and all benefits of electric vehicles will be achieved.