Study Title: Bottlenecks in the Proliferation of Electric Vehicles in Nepal

Research conducted by Martin Chautari

• Research Team:
  • Mr. Anil Baral (Principal Investigator)
  • Mr. Ramesh Parajuli (Researcher)
  • Mr. Bimal Aryal (Researcher)

An excerpt from the study:

Kathmandu is the one of the most polluted cities in the world. Air pollution is gradually developing into threatening levels to interfere with the health of people in Kathmandu. With the beginning of the commercial operation of Electric Vehicles (EVs), one of the most effective ways to combat this pollution has been tapped. EVs offer opportunities for reducing vehicular emissions in Kathmandu and other major urban areas of Nepal. Besides EV could develop into a full-fledged industry generating much wanted employment. However, the growth of EVs in Nepal is far from satisfactory. There are a host of legislative, financial, institutional, and technical reasons working in tandem with issues of governance and foreign aid assistance which are responsible for the lack of rapid progress in the EV sector.

In this regard, Martin Chautari was assigned the task of identifying the bottlenecks in proliferation of EVs in Nepal by Winrock International's Renewable Energy Program Support Office (REPSO ), Nepal. Both Martin Chautari and REPSO hold the view that in order to direct any kind of campaign in support of large-scale EV expansion in Nepal, it is necessary to develop a clear understanding of the present state of EVs in Nepal. This report is the result of this endeavor on the part of Martin Chautari and REPSO.

Background

The Electric Vehicle (EV) movement in Nepal took its root, though in an incipient form, after India imposed the trade embargo on Nepal back in 1989. The immediate impact of the embargo was fuel scarcity within Nepal. This prompted a group of engineers to find out an alternative arrangement for transportation. Well aware of Nepal being rich in hydropower, the group came up with an idea of operating electric vehicles in the country. With this aim in mind, a group called Electric Vehicle Development Group (EVDG) was constituted.

In a bid to promote the need of electric vehicles in a fuel-scarce country, the group tried to organize a private electric vehicle race in the Ring Road of Kathmandu. Advertisements were made in various media. But, there weren't any electric vehicles around (except trolley buses) that could participate in the race. Moreover, the people's movement that soon followed in 1990 made it difficult for EVDG to sustain its effort in this direction. After the restoration of Democracy, EVDG resumed its task by working on manufacturing a battery-operated EV. A Voxwagon was converted into a running EV in 1992 by EVDG.

In 1993, under the Electric Transportation Program for Kathmandu Valley, the Global Resources Institute (GRI), with assistance from the National Association of State Development Agencies (NASDA)/US Asia Environmental Partnership (USAEP) began a program that aimed to develop EVs as a profitable industry in the transportation sector. This program proposed that all Vikram (diesel or petrol) and Bajaj type tempos could be replaced from the streets of Kathmandu (Sherchan, 1997). GRI used the funds it had to convert Vikram tempos into EVs which were named SAFA tempos (meaning Clean Three Wheelers). The Vikram conversion project was initiated at the request of the then Deputy Mayor of Kathmandu Municipality, Navindra Raj Joshi. These converted EVs were put into operation for demonstration and to gain experience regarding the performance and economy of EV operation in Nepal.

At the end of the GRI run pilot project in early 1996, a group of Nepali professionals and entrepreneurs bought those EVs and they soon developed expertise in EV production. Currently over 100 EVs are plying the streets of the valley. At the moment, there are three private EV manufacturers: Nepal Electric Vehicle Industry (NEVI), Electric Vehicle Company (EVCO), and Green Electric Vehicle (Pvt.) Limited (GREV). In other words, EV manufacturing has emerged as an industry in Nepal. In 1997, His Majesty's Government and the Royal Danish Government signed an agreement to convert 100 diesel tempos into EVs within four years. For this purpose, a budget of 25 million rupees was allocated, part of which is going to be used for the establishment of charging stations. Now, Nepali banks too have shown an interest in providing finances to the EV industry.

EVs are endowed with multiple benefits. Since they run on charged batteries they do not emit harmful pollutants like unburned particulate, hydrocarbons, carbon monoxide, carbon dioxide, nitrogen oxides, sulphur dioxide, and lead, as is the case for fossil-fuel-based vehicles. EVs have a reduced noise level. They are appropriate for the Kathmandu valley and other cities in Nepal because EV operation suits low traffic speeds, short traveling distances, and mobility in narrow roads. There are more than 25,000 old and highly polluting vehicles in Kathmandu alone and converting them to electric vehicles (three wheelers and four wheelers) having zero tailpipe emission could make a significant difference in reducing air pollution. EVs technology represents an example of how a hydroelectricity rich country like Nepal can utilize its resources and reduce overdependence on imported fossil fuels.

Rationale of Study

Combating the air pollution problem in the Kathmandu valley requires the introduction of an efficient transportation system. Environment friendly vehicles will have to be part of that system. In this regard the importance of EVs as pollution preventing technology is indisputable and therefore EV operation should be accorded a high priority in the context of the ever deteriorating air quality of Kathmandu. Commercial operation of EVs has already crossed the two-year mark and the impact they have made is said to be encouraging. However, lack of information, proper networking among promoters and operators, and awareness among the general public are seen to be impediments in the growth of the EV industry in Nepal. Some of the problems cited by the entrepreneurs are: limited number of charging stations, insufficient parking space, inadequate operation routes, poor dissemination of technology know-how, etc. These concerns seem genuine. In order to bridge the information gap and identify the bottlenecks in the EV industry in Nepal, a comprehensive effort to gather relevant information and analyze the technical, logistical and operational aspects of EVs is required. Such a study will eventually help begin remedial actions to ensure the future of the EV industry in Nepal.

Despite the enthusiasm for EVs on the part of the people of Kathmandu, there is virtually no group or organization that has a holistic understanding of the EV industry in its entirety. Against this backdrop, a situation analysis of the EV industry in Nepal seems relevant. For the purposes of this study, the term 'EV industry' incorporates all actors engaged in (a) manufacturing or assembling electric vehicles, electric vehicle components, electric vehicle conversion systems, or deep cycle electric vehicle batteries, (b) installing electric vehicle components or electric vehicle conversion systems, (c) servicing electric vehicles, (d) operating electric vehicles for public transportation, and (e) providing the infrastructure for electric vehicles, including the operation of an electric vehicle battery utility, electric battery exchange stations, electric vehicle battery recycling facilities, or any other process or operation related to electric transportation.

Research Findings

The report has compiled comprehensive baseline information and major constraints with regard to economical and financial, technical, legislative and policy, environmental aspects of EV operation. It has identified some key areas for advocating the promotion of EVs in Nepal. Besides, literature review sheds the light on air quality condition of Kathmandu, international EVs movement, EVs movement in Nepal and incentives for EVs promotion in various parts of the world.

Despite public enthusiasm and understanding of the need of EVs for Kathmandu, the EVs movement is not getting the momentum as expected. A plenty of problems have appeared during the course of two years of EVs operation.

The specific problems are:

1. Operators' inadequate know-how on battery maintenance and difficulty in life cycle assessment.
2. Long pay-back period due to high initial investment.
3. Inadequate charging stations at convenient locations.
4. Inadequate parking stations.
5. Lack of battery leasing system.
6. Limited policies and their weak implementation thereby not creating conducive environment for displacement of polluting vehicles and positive incentives for EV promotion. Government's treatment towards EVs also remains inconsistent. This is reflected on the recent announcement to allow the purchase of petrol based tempos not exceeding 500, a reversal of its decision to ban three-wheelers eight years back.
7. Though financial arrangements for providing loans to EVs operators have been made by the various banks, the number of people approaching the banks for loan so far remain low due to lack of confidence on the EV's future.
8. Lack of a single and authorized institution to regulate and monitor and EVs promotion and management of air quality.

Though some technical problems like poor life cycle of batteries have been solved by developing experience with the batteries charging and maintenance, other problems such as inadequate charging stations and lack of batteries leasing system are yet to be solved. Although the preferred method of ownership would be for fleets of vehicles, the operation of electric vehicles by individual owners can be profitable if selling price of the electric tempos is in reasonable range i.e. about NRs. 400,000 and battery bank facility is available.

In addition, the government's efforts are limited and that too are fragmented thereby unable to generate much desired impact on the EV promotion. A comprehensive action plan targeting EVs promotion need to be formulated by bringing all the stakeholders (commuters, EV manufacturers, owners and drivers, concerned government bodies and INGOs) together. The action plan should incorporate the provisions for additional technical, logistical, infrastructure facilities, and economic incentives for EVs as well as provisions of stringent penalty for polluting vehicles.

Recommendations

With worsening air pollution in Kathmandu valley, the need to reduce the air pollution and improve the air quality has become a necessity. In this regard growth of EVs can play a crucial role in air pollution reduction and minimize the health costs associated with air pollution related diseases and hazards. Moreover, EVs like electric tempos are well suited for operation in the streets of Kathmandu valley. The narrow and crowded streets, low traffic speed and short traveling distances make the EVs a suitable choice for people of Kathmandu valley. EVs also help reduce dependency on expensive and imported fossil fuels and utilize hydro-electricity for which Nepal possess tremendous potential. Given below are the pertinent points which can serve as a platform for advocating the promotion of EVs in Nepal.

The short-term Advocacy

1. Work with Radio Sagarmatha and other media organizations to bring out flash-news on the number of electric tempos every fortnight, and broadcast programs on Electric Vehicles.

2. Conduct training programs on operation and maintenance of EVs for workshop staff and drivers. There is a good possibility of using DANIDA funds for training of users and owners.

3. Helping identify possible consensual routes for EVs at the ward level by discussing with local clubs, traffic police and local elected bodies.

4. Creating a public pressure to facilitate the demand for EVs i.e., demand driven initiative.

The Long-term Advocacy

1. Pressing the government for one window policy i.e. a single authority to regulate and monitor EVs and to look after the problems of EV industry would be a good point for advocacy. There is not an integrated authority to look after the issues related to EVs. People involved in EV industry have to approach different ministries such as Ministry of Population and Environment, Ministry of Water Resources, Ministry of Finance, Ministry of Industry, to get things done.

2. Advocating the establishment of charging stations and battery bank in sufficient number at various places would help in promotion of EVs by 1. reducing initial investment cost for EV operators; 2. providing charging stations at convenient points at on various routes; and 3. spreading the cost of the batteries and shouldering the risk of early failure. In this regard the role of donor agencies and the government assumes a greater significance as their concerted efforts help in financing of charging stations and battery bank establishments.

3. Further reduction on tariff on electricity used for charging batteries during off-peak hours will reduce the charging cost for EV operators and increase the revenue for government by tapping underutilized electricity in off-peak hour.

4. Full exemption from customs duties and VAT for electric vehicle industries. Just as equipment, machinery and parts used in generation of solar and wind energy receive full exemptions for custom duties and VAT (Finance Act, 2055 BS), EV industry being the cleaner industry like solar or wind energy industry should be entitled to full exemptions from custom duties and VAT. The government should not concentrate only on the foregone revenue due to VAT exemptions on these parts. It should be borne in mind that the loss of potential revenue from removal of duties and VAT is far outweighed by the economic costs of vehicular pollution in the Kathmandu valley.

5. Urging the concerned government body for strict enforcement of vehicular emission standards and banning of polluting vehicles from the core city areas as punishment for pollution.

6. Development of polluting- vehicle-free routes in a stepwise sequence to drive out non-conforming vehicles to the peripheral routes. This can be done by working with Kathmandu Metropolitan City and Lalitpur Sub-metropolitan City with assistance from the Department of Transport Management, Traffic police and Ministry of oPE.

7. Allocation of convenient drop-off and pick up points for EVs at various areas in central and peripheral Kathmandu. Some examples are space leading to Bhotahity, in front of Ratoghar, and in front of Sajha Sales Depot in Ratnapark.

8. Urging the government and donor agencies to provide funding for research and development activities on the manufacturing of two, three as well as four wheelers electric vehicles.

9. Generation of technical and financial support for the battery collection and establishments of battery recycling plants.

10. Allocation of fund by DANIDA and other donor agencies to finance the purchase of new EVs at the same 5% interest rate as DANIDA has earlier set for Vikram tempo conversion on a sustained basis so as to avoid the market poisoning.

11. The potentials for EVs in other parts of rapidly growing cities should be assessed. There are possibilities of introducing EVs in cities like Pokhara and Hetaunda where gasoline tempos like Bajaj and Vikram are banned, as non-polluting mode of transportation.

12. There is also possibility of promoting EVs thorough theme based ownership, e.g, women owned EVs. EV can be projected as a source of employment generation for women too. There was a case of women driving Electric tempo being reported in The Kathmandu Post.

Martin Chautari
Thapathali, Kathmandu, Nepal
tel: 977-1-246065
email: chautari@mos.com.np