How feasible is Nepal’s e-mobility plan?

Rujen Maharjan had almost made up his mind to buy an e-scooter last year when the government slapped additional taxes on all electric vehicles in its annual budget announcement. 

“I have always thought of going for something environmentally sustainable when it comes to transport, as it is something I use every day,” said Maharjan, a 24-year-old video editor. “But the hike on taxes by the government got in the way. A vehicle is an investment but to buy a ride that's already expensive and then have more taxes on top did not make sense to me.” 

A year later, the Nepal government backtracked on its decisions. On May 29, Finance Minister Bishnu Paudel presented the country’s federal budget for the upcoming 2021-22 fiscal year. In it, the government completely repealed excise duties on e-vehicle imports while cutting customs duties down to 10 percent.

Last year, the excise duties on e-vehicles -- or EVs -- had been raised by 30-80 percent, depending on the vehicle, and customs duty by 60 percent, making the already expensive EVs virtually unaffordable to most consumers.

Besides rolling back those decisions, Paudel also announced that renewal taxes and road taxes for the next five years would be waived for those who replace their fossil fuel engines with electric batteries. The provisions are in line with Nepal’s goals to replace light petrol-diesel vehicles with electric vehicles by 2031, the government declared.

The announcement was positive, signalling that the government is moving towards a more sustainable green energy path. It is also great news for consumers like Maharjan, who says he will most likely buy an e-scooter this time around. 

The government’s plans will also accelerate the implementation of the country’s Nationally Determined Contribution goals, a list of ambitions submitted by Nepal to the United Nations Framework Convention on Climate Change, an international treaty signed by 154 countries that commits to take climate change action. But while these changes appear progressive and environmentally sustainable, are they really achievable? 

The need to go electric

There is no denying that the world needs to explore all avenues of green energy, especially when it comes to transportation. In Nepal too, consumers have shown interest in EVs. According to a 2018 report, the total number of EVs registered annually grew by 14 percent from 1990-2015. 

“For a hydro-powerhouse country like Nepal, making the shift to electric vehicles is only logical. The transition to electric transport could also tackle rising pollution levels in the country,” said Pramod Bhandari, senior executive manager at Agni Energy, the authorised dealer for Mahindra motors.

And the new budget does seem to be serious about making the transition to electric vehicles, he says. 

“Last year’s taxes, coupled with the pandemic, really hit e-vehicle sales. But with the new tax rates, maybe consumer confidence will rise again. This will be a boost to the national economy too,” said Bhattarai. 

Recent numbers are hard to come by, but there are approximately 7,000 e-scooters and over 1,000 e-vehicles in the country, according to Electric Vehicles Association Nepal (EVAN). The electric vehicles available in Nepal are produced by companies like Mahindra, Kia, NIU, Vmoto, Cherry, Hyundai, MG, Peugeot, Audi, and BYD. 

Then, there’s also regional pressure to go electric. 

“Nepal’s two closest neighbours, India and China, have already committed to going green in terms of transport. It is about time Nepal made a commitment too,” said Bhandari. Several of China’s major cities, such as Shenzhen and Guangzhou, have already made the transition to EVs. And India too has rolled out public EVs in a number of major cities like Mumbai, Delhi, and Pune. 

Nepal too has made a commitment to going fully electric. 

In 2018, while launching two electric buses that were to be operated under Sajha Yatayat, Prime Minister KP Sharma Oli declared that “20 percent of vehicles in Nepal would be electric by 2020”. We are now halfway into 2021 and that promise, like many others the prime minister has made, never materialized. Even the buses that were launched at the event never saw the light of day, owing to some technical difficulties. 

The same year, the government also committed to buy 300 electric buses, among which 30 would run inside Kathmandu. Sajha Yatayat had obtained the tender to purchase the buses but a year later the government scrapped the deal. The busses have not been bought yet.

“People have little faith in the government when it comes to execution,” said Umesh Shrestha, chairperson of Electrical Association of Vehicles Nepal (EVAN). “Especially considering the current political situation of the country, who knows how long the Oli government will even last? Once a new government comes in, will it change its stance again? Is this just a populist agenda of the Oli government to stay in power?”

What’s been done so far to encourage transition?

The Nepal government has introduced many plans and policies to promote EVs. The oldest effort can be noted in the 2001 National Transport Policy, where the government promotes ‘utilization of means of transport by solar power and electricity’.
 

The more recent policies include the 2018 National Action Plan for Electric Mobility and the 2015 Environment Friendly Transport Policy. A draft of the National Sustainable Transport Strategy, which talks about electric public transportation, was also prepared in 2015. But the strategy is still awaiting final approval. 

The policies list out specific targets for electric vehicle adoption. But policies alone are not enough, and that is where the problem is. 

Where is the power?

For a country to run on electric vehicles, you need electricity. According to the Nepal Electricity Authority’s latest annual report, hydropower plants generated a total of 3,021 GW of electricity in 2019/20, an increase by 18.57 percent from 2018/19. Upper Tamakoshi will soon come into operation too, adding another 456 MW to the grid. Many other projects are underway as well, which means there will be more power generated. 

But our country is nowhere close to being energy sufficient, let alone having a surplus. According to the NEA report, out of the total available energy, the NEA’s own generation contributed only 39.02 percent, whereas electricity imported from India and produced by domestic independent power producers (IPPs) accounted for 22.33 percent and 38.64 percent, respectively. 

According to a 2020 report by the Nepal Times, the NEA has already entered into Power Purchase Agreements (PPA) to buy about 6,000MW of electricity from private operators, but a lot of this will depend on the commissioning of transmission lines under the Millennium Challenge Corporation (MCC) project.

“Let’s suppose the government does manage the energy supply chain, there are ways to do it, maybe by exporting surplus energy during monsoon and importing it during Nepal’s dry season,” said Shrestha of EVAN. “But even if the energy problem is solved, where is the infrastructure to facilitate e-mobility in the country? For instance, how and where will they build charging stations?”

The government has promised that it will build 500 charging stations across the country, beginning with 50 inside the Kathmandu Valley, with Chinese assistance and under the coordination of the Nepal Electricity Authority.

But charging stations were promised earlier too. In 2019, the NEA had announced that it would build 15 stations in the Kathmandu Valley in six months and an additional 35 across the country, in cities like Pokhara, Chitwan, Nepalgunj and Biratnagar. Before that, in 2018, the Ministry of Environment too had pledged to build five charging stations in Kathmandu.

But currently in operation, there are only three charging stations inside the Valley, run by Sundar Yatayat, a private company. Outside the Capital, there is only one charging station, built by another private company, Kia Motors, in Kurintar on the Prithvi Highway. 

What are the other challenges?

In the budget, the government has allocated more than Rs 14 billion to the Ministry of Environment and Forests. Out of this, how much will go to the development of infrastructure for e-vehicles remains unclear. 

But the environment ministry is not the only government body that will be involved. The Ministry of Energy, Water Resources and Irrigation, under which falls the Nepal Electricity Authority, and the Ministry of Physical Infrastructure and Transport have to work in tandem too. Smooth coordination among these three ministries is necessary for the country to transition to electric transport.

“We know very well what intergovernmental coordination is like in this country; it is dismal,” said Shrestha. 

To give an example, Shrestha shared how in 2006, he had converted his 1980 Mitsubishi van into a battery-powered engine. At that time, he went from one government office to the next for three years, trying to propose the formulation of a conversion policy which would provide subsidies to people who turn their fossil fuel vehicles electric. 

“It’s only when you give people incentive that they will want to change. I gave up in 2009 since nobody listened,” he said.

Then in 2014, the government came up with a Transport Policy, which stated subsidies would be provided to those who convert. 

“I was happy, but there were no details, as to what cars would be allowed to convert, what batteries would be used. The details remain murky,” said Shrestha. 

A clear, detailed roadmap that outlines the country’s plan to go fully electric in 10 short years is perhaps too much to ask from the government right now, but none of the spokespersons of the three ministries The Record spoke to seemed to have any inkling of who’s going to do what.

“Nothing has been finalized yet. We will come up with a more concrete plan by the end of this year,” said Madhu Prasad Bhetuwal, joint secretary at the Ministry of Energy, Water Resources, and Irrigation.

Ad hoc interministerial communication is not the only problem. Another problem is a lack of general awareness among the people. “Most people still associate e-vehicles with ‘luxury’ items, as they are more expensive than their fuel-run counterparts,” said Bhandari. “But the public needs to know that in the long run, the operational costs and maintenance costs of using an electric vehicle are far lower.”

How can these problems be overcome?

In addition to raising awareness about e-vehicles, the government should also make bank loans easily available for consumers who want to purchase e-vehicles, says Shrestha. 

“There is a lot of hassle when it comes to procuring a loan from banks to buy an e-vehicle. The banks do not have faith in the machines. They say these vehicles are not ‘proven’ technology and refuse to give loans,” he said. “Loans should be easily provided and interest rates should be lowered to give people an incentive to change.”

Another major point of focus should be on public transport. 

“If the government focuses on turning the public transport sector electric then we will see change,” said Shrestha. “Take taxis, for example. One taxi uses up to 100-150 liters of petrol a day around Kathmandu, and there are hundreds of them in the Valley. The government’s tax reduction plan applies mostly for private vehicle owners, not for public transport. But without considering public transport, there’s no way we can go electric.”

Currently, he says, there are only four electric public buses that run inside Kathmandu, operated by Sundar Yatayat.

Of course the challenges that exist do not mean the plan is impossible -- it all just comes down to government execution. 

“There’s a lot the government can do. EVs are the future, and Nepal can make the transition. But not at the rate we’re going, and just cutting down on taxes is not going to be enough,” said Shrestha.