The Nepal Weekly 
January 3, 2023
It is globally recognised that the transport sector is a major contributor to greenhouse gas (GHG) emissions. Its contribution to GHG emissions continues to grow rapidly with increasing urbanisation and motorisation, particularly in developing countries. Transport sector in Nepal also contributes towards air pollution and its negative health impacts. Balance of payment of the country has been playing big role by the import of petroleum products of transportation, industries and domestic energy. Hence, transport sector is one of the main causes of deteriorating air quality in Nepal.It is therefore important for countries like Nepal, who have a small but rapidly growing vehicle fleet, to aggressively decarbonise the transport sector.
Nepal has been generating electricity from hydropower plants and other renewable energy technologies such as Solar PV systems. So are the electricity generated from hydropower plants has been reached to 2200 MW as installed capacity. Similarly Solar PV farms are contributing around 60 MW of electricity from different farms owned by Nepal Electricity Authority and private energy entrepreneurs.
Nepal now needs to utilise electricity generated in the country in transport, industry and domestic sectors. In this context, transport sector can consume such clean energy by replacing use of fossil fuel vehicles. That will help reduce the wider gap in the balance of trade and also reduce use of polluting fossil fuels.
As said above, apart from its contribution to reducing carbon emissions, there are other several environmental and socio-economic benefits of EVs.
Maintaining air quality cab be a benefits from EVs. Electric vehicles are beneficial in urban areas where local air pollution is a concern. Use of the electric vehicles ensures reduction in demand for fossil fuel demand and use of cleaner technologies and fuels.
Electric vehicles are mostly quieter than petrol/diesel vehicles by around 20 decibels (dB). Diesel buses operate at 70 dB, whereas electric buses operate at about 60 db. Since loudness is measured on a logarithmic scale, this means that electric buses are half as loud as diesel buses. Such a significant reduction in noise can have a significant impact on well-being.
Public Health: associated with air pollution and noise pollution. Energy Security is also a benefit of EVs. According to the Department of Customs (DoC), Nepal’s exports grew by 88.30 per cent to Rs. 131.65 billion during mid-July 2021 and mid-February 2022. As there is heavy dependence on import, the increasing and fluctuating crude oil prices therefore pose a severe threat to Nepal’s energy security. Despite the government announcement to increase consumption of electricity to reduce the import of petroleum products, the import of fossil fuel has been on the rise every year. Using alternate solutions such as EVs will reduce the demand of crude oil and therefore the import.
Employment generation is also one scope. EV sector provides various direct and indirect employment opportunities Like, EV manufacturing, batteries, chargers and other EV related accessories lead to direct job creation in the country.
Nepal’s Second Nationally Determined Contributions (NDC) to the Paris Agreement includes several targets for electric mobility such as increasing the market share of private electric vehicles to reach 25% by 2025 and 90% by 2030, and share of public electric vehicles to reach 20% by 2025 and 60% by 2030.This target decreases 9% dependency in fossil fuel which would reduce around 9% in emission. The NDC also includes the target to develop 200 km of the electric rail network to support public commuting and mass transportation of goods by 2030. Thus, these targets compel the government, and motivate private sectors to promote electric vehicles.
In the budget for the FY 2016/17, the GoN reduced customs duty on the import of EV used for public transport to 1% from 30% and for private vehicles to 10% from 30%. Furthermore, EV were not required to pay excise duty, and they only required to pay 4% road tax compared to 8-10% paid by other vehicles.. The budget for the FY 2020/21 has, however, increased the customs duty on private EV to 40%, added an excise duty ranging from 30-80% depending on the power of the motor and increased the road tax to 5%. Although the new customs duty for EV is still lower than that for fossil fuel run vehicles, the drastic increase in customs duty and excise duty will almost double the price of EV and make them less competitive in the market.
Moreover, EVs imported with comfortable tax rules are contributing more to institutional and individual uses. The number of importing ratio is at a growing trend. It is also appreciable that many attractive EVs in minicars, hatchbacks and SUVs have been introduced in Nepal. But Nepal still lacks policies for promotion of EVs for public transportation. The private sector engaged in public transport sector is not seeing profitability’ in operating electric buses in present situation where a fossil fuel vehicle can be purchased at the cost of tax to be paid to import an electric bus. Thus, the government sector must review the tax policy as well as promotional incentives for EVs for public transportation. The fund raised tax on each litre of petrol and diesel as Pollution Control Fund may be a source for the best of utilisation to this cause.
