Background
Nepal was at the forefront of the sustainability curve since the 1970s with zero-emission public transportation – trolley buses and Safa tempos. Backed by abundant electricity and planned infrastructure, trolley buses were the embodiment of accessibility and equity to the general people. Safa tempos showed that reducing air pollution doesn’t necessitate major technological investments. These initiatives were supported by tax cuts and loan incentives, resulting in the world’s largest fleet of public Electric Vehicles (EV) at the time. However, unaddressed battery/technical flaws and majorly, the government policy favoring fuel counterparts by lowering taxes doomed the upcoming future. Having huge hydropower electricity possibilities, transitioning to electric options could be the optimal strategy for global sustainability along with a more regulated public mobility infrastructure. With the European Union just announcing Earth having its warmest year on record, the second largest CO2 emitter, the transport sector, needs to be made sustainable.
Rising demand for private electric mobility
As a part of a broader strategic plan, Nepal targets 90% electric vehicles by 2030. Government incentives like tax rebates sparked a surge in EV adoption, driven by lower operational costs amidst sky-high fuel prices. Banks are offering up to 90% financing further aided EV purchases. A steady power supply from thriving hydro projects has sustained the demand of battery-powered vehicles. Shifting lifestyles and conscious choices are also pivotal in the accelerating demand for electric vehicles.
Figure 1: Number of EVs imported in Nepal
Source: Department of Customs, 2023/24
The Department of Customs reports a nearly threefold increase in EV imports during FY 2022/23, owing to the EV-friendly policies. Electric cars constitute over 60% of these imports, signifying a surge in the demand for private electric mobility. Additionally, 80% of the registered vehicles in the same period (FY 2022/23) were two-wheelers. Promoting the use of e-scooters would help reduce traffic congestion and pollution effectively. Despite an overall slowdown in the economy, the demand for EVs continues to rise, with the sales ratio now at 60:40 compared to internal combustion engine vehicles. Shifting to the greener solution is definitely limiting pollution and the dependency on fossil fuels, however, additional sustainable efforts are crucial for acceleration.
Public Transportation prospects
A well-managed public transportation system creates sustainability and this is exemplified by the European cities. Over 70% of the registered vehicles of Nepal ply in the traffic and pollution-plagued Kathmandu valley. With the imports of private EVs on the rise, the concerns for traffic and pollution are also on the rise, which underlines the urgent need for a mass transportation system. Despite the metropolitan’s targets to reduce private vehicle use, only 1.4% of total registered vehicles are public in the FY 2022/23, indicating a slow progress. The accessibility seems far off. Effective policy formulations are vital to foster sustainability in public transportation.
Sajha Yatayat’s ‘ICE Engine to EV Conversion Project’, is a substantial move toward sustainable public transportation, potentially denoting the intervention needed for equitable and accessible public mobility. However, a singular initiative isn’t likely to bring about the paradigm shift needed. Sajha Yatayat is already delivering top-class convenience by tracking the routes and the buses through its application. With political stability and policy support, additional initiatives can be brought into play to promote sustainability.
Government’s commitments for EV
The government entities are actively promoting sustainable transportation practices exemplified by the Nepal Electricity Authority (NEA) and the Nepal Tourism Board, committing to exclusively use EVs for transportation to encourage the public. NEA’s ambitious target of 100% electrification by 2024, aligns with Sustainable Development Goals (SDGs) and is also facilitating an EV-friendly ecosystem and widespread EV adoption. The Fiscal Year (FY) 2023/24 budget introduced incentives for the establishment of EV manufacturing/assembly plants in Nepal with tax subsidies and land leases. These commitments will lead to a smoother EV transition.
With 150 operational charging stations, the government is proactively expanding EV infrastructure nationwide by working on adding 500 more by sharing the responsibility with the private sector through Public-Private Partnerships (PPPs). Besides the NEA, automobile dealers like BYD and Sajha Yatayat are actively building the charging stations. Remarkably, the government has made it mandatory for gas stations to install charging stations both for existing and new registrations. These showcase the government’s heightened commitment to EV adoption.
Roadblocks
While the transition to sustainability seems sluggish but understandable, the government’s target to achieve EV sales to 90% for private vehicles and 40% to public appears impractical. There exists a potential to offset nearly 20% of the trade deficit which comes from importing fuel, yet, EVs are subjected to high taxes in the FY 2023/24 budget. The Department of Customs found that the popular EV models in the 50-100kW category, like, BYD’s Atto3, Hyundai’s Kona, Hyozon’s Neta, Tata’s Nexon etc have the most imports and this category was unexpectedly subjected to 10% excise duty along with 15% customs duty, making them costlier. This unpredictable move from the government has left the people questioning whether it is in favor of promoting sustainability. Also, Nepal’s difficult geography with developing infrastructures poses an obstacle. Majority of the charging stations are centered in the capital itself, leaving the public questionable on the feasibility of EVs’ long distance travels. Additionally, the taxation policy has changed four times within two years and this could diminish the public interest. Though the government policy has helped proliferate EVs, much is yet to be considered for lasting sustainability.
Future outlook
EVs represent the future of transportation. By mobilizing the country’s hydro capacity and supportive policies, Nepal is once again embracing the electric evolution. The availability of EV-friendly financing services has given an additional edge. The government’s decision to make it mandatory for gasoline stations to have EV charging units together with the Public-Private Partnerships (PPPs) is progressive and inclusive. While EVs are instrumental for sustainability, they are not the ultimate solution. EV purchases for the long-distance travelers are delayed because of the difficult terrain and lacking charging stations. EV adoption alone doesn’t address the e-waste issues in one of the world’s most polluted cities, that is Kathmandu. Furthermore, initiatives like Sajha Yatayat and fostering PPPs for improved public transport, including converting taxi fleets electrically and introducing ride-sharing mechanisms akin to India are pivotal. Public mobility can be promoted through pedestrian lanes, cycling lanes and exploring alternative fuels like hydrogen and biofuels, as well as potential reintroduction of trolley systems present sustainable substitutes. People can embrace the idea of public buses and microbuses, given its role in addressing the prevalent congestion as well as the pollution issues. Transport infrastructure is the very foundation for the overall sectoral development and Nepal can be more sustainably responsive.
Bibhuti Kharel graduated with a Master's degree in Business Administration (Project Management) from Kathmandu University. She is keen about development economics, diplomacy as well as energy and sustainability. Currently, she works as a Research Fellow at Nepal Economic Forum (NEF), building on her prior experience as a Project Development Intern in the Investment Board of Nepal.
