The government has approved the setting up of 40 electric vehicle (EV) charging stations along motorways at a power tariff of Rs39.75 per unit in the initial draft of EV policy.
The government is also mulling over extending financing to incentivise the production of electric two and three-wheelers.
Sources revealed that in a recent meeting of the committee on EV policy, the Pakistan Banks Association (PBA), represented by Chairman Zafar Masud and others, presented a term sheet for providing incentives to stimulate the demand for electric two and three-wheelers.
Zafar Masud suggested offering Karachi Inter-bank Offered Rate (Kibor) plus 3% to incentivise banks but the chair noted that interest rate should not exceed Kibor plus 2.5%. Masud proposed a debt-to-equity ratio of 80:20, but the chair suggested a ratio of 70:30, as allowed by the State Bank of Pakistan (SBP).
Secretary of the Ministry of Industries mentioned that it could be discussed with the SBP. He stressed the importance of providing insurance coverage for EVs, including battery theft.
Overall, the committee was satisfied with the proposed financing mechanism and it was agreed that the industries ministry and banks would refine the term sheet in collaboration with the Finance Division and the SBP.
A report of the working group on identifying 40 locations on motorways was approved. In this regard, the ministries of communication, power, petroleum and the Federal Board of Revenue, along with the Central Power Purchasing Agency-Guarantee (CPPA-G), were requested to resolve the issues facing the oil marketing companies (OMCs) to pave the way for establishing charging stations within the next three months.
The committee on EV policy was satisfied with CPPA-G’s proposal for a power tariff of Rs39.75 per unit for the charging stations.
Meeting participants agreed, in principle, on the financing plan for electric two and three-wheelers, presented by the PBA, however, it would be finalised in consultation with the SBP and Finance Division.
A working group was formed to identify an appropriate customs duty and tax structure to encourage the adoption of EVs and their local manufacturing.
Another working group was set up to implement the financing plan, aimed at increasing the demand for EVs.
A working group will work on a mechanism for tracking emissions and carbon credits as well as the development of a dashboard for this purpose at the industries ministry.
During the meeting, the industries secretary explained that work on preparing the first draft of EV policy was already underway. He pointed out that significant progress had been achieved in three areas: regulations and the suggested power tariff for charging stations, establishing around 40 such stations on motorways in the first phase for the use of EVs in cities and a financing scheme to incentivise the demand for electric two and three-wheelers.
He said that the Revenue Mobilisation, Investment and Trade (ReMIT) project of the commerce ministry had agreed to support a team of experts, including one with international experience, to assist the industries ministry in formulating the policy.
Following that, the managing director of National Energy Efficiency and Conservation Authority (Neeca) made a short presentation on the regulations for charging stations, which had recently been approved by the Neeca board.
These regulations, to be notified shortly, are intended to incentivise investment in charging stations by removing the upper cap on charges.
The regulations cover various aspects such as one-window operation, standardisation of charges, time frame for approval of electric connections by power distribution companies, energy conservation and safety codes.
Ministry of Climate Change Parliamentary Secretary Ahmed Atteeq Anwar suggested that Neeca should ensure that a charging station could serve multiple types of vehicles, which could be achieved through a multi-bead connector. “This is especially important given the very limited number of charging stations currently available in Pakistan.”
It was followed by a presentation from CPPA-G on power tariff, where various scenarios and assumptions were considered pertaining to the profitability for charging station owners as well as savings for EV users.
The Energy Centre at the Lahore University of Management Sciences (LUMS) presented its work as well. It was noted that if power tariff was kept around Rs40 per kilowatt-hour (kWh), the return on investment in a small electric sedan would become viable for buyers within three to four years.
The committee agreed that a further higher tariff would not provide any incentive for transitioning to electric vehicles.
The additional secretary provided an overview of the progress in identifying locations for 40 charging stations from Peshawar to Karachi and ensuring that the intervals were within 120 km. He stated that those locations were primarily service stations along motorways, owned by the National Highway Authority (NHA).
It was noted that the OMCs operating petrol pumps at those service stations had no objection to the installation of charging stations at their own cost. However, they will require support, such as the provision of power connections. The new regulations of Neeca will be of great help in this regard.
To further reduce power tariff, the industries secretary proposed that NHA should consider allowing the use of extra land in service areas or alongside motorways for establishing solar stations. Tahir Jamil of NHA agreed to consider that option and update the committee in next meeting.
Ahmed Atteeq Anwar emphasised the need for installing signs to indicate the presence of charging stations. He also called for taking measures such as advance booking to reduce the waiting time.
