Islamabad, Nov 26: ADB Warns Pakistan of Potential Revenue Loss in Billions from EV Transition. The switch to electric vehicles will directly impact $5.680 billion, which accounts for over 80% of road user revenues in Pakistan. As a result of this revenue loss, only 35% of the remaining road user revenues will be sufficient to cover the necessary road maintenance.
In its most recent research, “Road maintenance financing and cost recovery options, the future of road user revenue in developing Asia and the PACIFIC,” the Asian Development Bank (ADB) made this claim. Of the 500,750 kilometers of roads in Pakistan, a significant chunk (40%) are paved. 65 kilometers per 100 kilometers is the average road density per area.
The average annual cost of road maintenance is anticipated to be $3,472 million, or 0.9 percent of GDP. Forty-four percent of the needs are met by the $1,527 million budgeted for road maintenance. The average road user revenue is $6,897 million, which is equivalent to 1.8 percent of GDP and twice the expected road maintenance needs.
Fuel-based revenues account for more than 80 percent of road user revenues, which is the most of any of the 10 sample countries. The switch to electric vehicles will directly impact $5,680 million in revenue. According to the analysis, if this revenue is lost, the remaining road user fees will only be sufficient to pay 35% of the needs for road repair.
Because the rates for electric vehicles are set up to be 98 percent lower, customs revenue from vehicle customs duties will also be impacted, potentially impacting an additional $394 million in revenue. There aren’t many electric cars on the road right now. Seventy-nine percent of registered vehicles are two- or three-wheelers, which will probably make the switch to electric vehicles faster.
EVs
The changeover process is anticipated to be accelerated further by the introduction of domestic electric vehicle production capacity and financial incentives for the import of electric vehicles. However, the shift will be hampered by the limited capacity of the electrical network and the absence of charging facilities.
In 2020, there were around 31 million automobiles in Pakistan’s fleet. These car registration figures, however, are thought to be based on yearly new registrations and don’t seem to account for vehicles that are being decommissioned. As a result, they overestimate the size and growth rate of the fleet of vehicles. Motorcycles and rickshaws with two or three wheels make up the majority of vehicles (79%) and this ratio is steadily rising.
Just 13% of all vehicles are passenger cars, which is just somewhat more than the share of buses, lorries, and other vehicles. Punjab Province has by far the largest percentage of registered vehicles (68%) compared to Sindh (24%), particularly in Khyber Pakhtunkhwa (6%) and Balochistan (2%), where the per capita percentage of vehicle ownership is lowest.
The average yearly growth rate of the vehicle fleet between 2016 and 2020 was almost 10%, but this expansion was mostly in rickshaws and two- and three-wheeler motorcycles, with smaller growth percentages for light-duty vehicles (7%), and other vehicles (4%). Since these growth rates do not account for vehicle decommissioning, they are probably overestimated.
With an estimated 300,000 cars and 2 million motorcycles produced in 2019, Pakistan’s rapidly expanding local auto sector supplies a sizable amount of new automobiles. This covers both local brands and the compilation of global brands.
There were an estimated 25,000 electric vehicles in Pakistan at the time, according to the 2021 study on Scaling Up Electric Mobility in Pakistan. These are mostly two- and three-wheelers, with a small number of electric vehicles. Three potential electric car penetration scenarios are presented in the paper. By 2030, 8.2 million electric vehicles are expected to be in use under the high scenario. By 2030, 4.8 million and 2.4 million electric vehicles are anticipated under the medium and low scenarios, respectively.
Effect on the Use of Fuel
The effects of these scenarios on fuel consumption vary; the high scenario is expected to reduce the use of fossil fuels by 18 million tons of oil equivalent (TOE) during the entire 2021–2030 decade, resulting in a reduction of 5.1 million TOE annually by 2030. This decrease would be equivalent to 10 million TOE and 5 million under the medium and low scenarios.
By 2030, this translates into yearly fuel consumption reductions of 3.0 and 1.4 million TOE, respectively. In the medium and low scenarios, the emphasis would be on electrifying two and three-wheelers because they are less expensive to buy (conversion kits for pre-existing motorcycles start at only $1,200) and have a shorter lifespan. Despite their low fuel use, the sheer volume of these two- and three-wheelers means that they contribute to about half of Pakistan’s road transport fuel consumption.
Enacted in 2021, Pakistan’s National Electric Vehicle Policy establishes a specific goal for the adoption of electric vehicles and offers incentives to achieve it. The policy aims to sell 30% of automobiles and 50% of buses and two- and three-wheelers as electric vehicles. Despite introducing concessions for the import of electric vehicles, the policy concentrates on expanding domestic manufacturing of electric vehicles rather than offering any purchase incentives for their import.
