Electric mobility is not new to Nepal. In fact, it began in 1975, when an electric trolley bus system was set up in Kathmandu with Chinese assistance. The 13 km trolley bus line, owned and operated by a government corporation, operated from 1979 till 2009, when it permanently shut down because of political and bureaucratic mismanagement[1]. The next major milestone was in 1995. That year, the 12-seater battery powered electrical three-wheelers were introduced on the streets of Kathmandu to replace the highly polluting diesel operated three-wheelers – the “Vikram tempos”. These electric three-wheelers, called “Safa Tempos”, or clean three-wheelers, are locally manufactured. At one point in early 2000, they constituted the largest fleet of battery-powered public transport vehicles in the world[2]. Currently, about 700 safa tempos are still in operation[3]. In addition to ferrying passengers, they are also used for freight and solid waste transport. In addition, the number of suppliers and private users of two-wheeler and four-wheeler electric vehicles is steadily increasing. Of about 15,000 automobiles sold annually in Nepal, about 1,200 are electric[4]. There have also been numerous experimental attempts at converting internal combustion engine (ICE) vehicles to electricity. There is also a transport company, Sundar Yatayat, currently operating 4 public electric buses in Kathmandu[5].
Nepal also has policy strategies for promoting electric vehicles. The National Climate Change Policy of 2019[6] prioritizes switching to electricity for various industries and infrastructure including transportation. The National Transport Policy of 2014, the Environment and the Climate Policies of 2019[7] encourage and promote the use of electric vehicles. The Environment-Friendly Vehicle and Transport Policy of 2014 had set a target of 20% of total vehicle fleet to be “environmentally friendly”. Unfortunately, this target has not been met. This Policy had also set targets for establishing charging stations. The 2018 National Action Plan for Electric Mobility proposes various initiatives to promote electric mobility in Nepal. However, it does not have timelines nor an investment plan. Nepal’s Nationally Determined Contribution of 2020 has a target of 90% of private and 60% of public vehicle sales to be electric by 2030.
The government is ,however, trying to meet its goals through a few policy instruments in place. In 2016, the government reduced electric vehicle (EV) customs duty to 1% for public transport and 10% for private vehicles (both from 30%. It is 80% for ICE vehicles). Furthermore, EV are exempt from excise duty (55-1oo% for ICE vehicles) and pay only 4% road tax (compared to 8-10% for other vehicles). However, in 2020 the government regressively increased the customs duty for private EVs to 40% and levied excise duty ranging from 30-80% depending on the power of the EVs. It also increased the road tax to 5%. Another policy instrument in place is reduced tariff for EV charging stations.
Promoting EVs in Nepal has several benefits. Firstly, Nepal is already beginning to experience electricity surplus, especially during the off-peak hours during the day and night. With suitable electricity pricing, the surplus electricity can be used for charging of EVs. Secondly, petroleum products constitute about 15% of Nepal’s import bill, which is a big drain on Nepal’s foreign currency reserve. Substituting vehicle fuel from petroleum with electricity will reduce this drastically. Thirdly, vehicular emissions contribute significantly to ambient air pollution, especially in cities like Kathmandu. EVs will help to reduce this pollution drastically too. Fourthly, calculations have shown that the life cycle cost of owning and operating an electric vehicle is lower than that for an ICE vehicle. Consequently, there is a growing interest to both purchase EVs and to set up EV based businesses.
However, more needs to be done to meet the national aspirations for electric mobility so that we can realize its benefits. Some of the future steps that need to be taken include the government formulating an integrated and realistic policy strategy that includes specific targets and timelines. The strategy will then need to be operationalized through appropriate policy instruments policies. Since the upfront cost of EVs are generally higher than that for ICE vehicles, there will also be a need for financial institutions to formulate and implement innovative financing instruments. Innovative business models regarding sale of EVs and installation and operation of charging stations will help promote EVs. In the new federal structure of governance in Nepal, partnership between local governments & the private sector to promote public electric mobility will also be important. Finally, Nepal will have to aggressively implement it newly formulated National Distribution Plan to augment the existing electricity distribution system, such that households, businesses and charging stations can be assured of adequate and reliable electricity supply.
[1] https://www.nepalitimes.com/banner/kathmandu-bhaktapur-trolley-bus/
[2] https://www.bloomberg.com/news/articles/2019-08-26/why-nepal-once-led-the-world-in-electric-buses
[3] http://www.mofe.gov.np/downloadfile/E-mobility%20Assmnt%20NDC%202020_1623998131.pdf
[4] https://kathmandupost.com/national/2021/06/21/nepal-to-switch-to-light-electric-vehicles-by-2031-as-fossil-fuel-import-balloons
[5] http://www.newbusinessage.com/Articles/view/13253
[6] https://www.mofe.gov.np/downloadsdetail/8/2018/36366627/
[7] ibid