The Need for Nepal’s Electricity Mobility Strategy

Thanks to Nepal’s hydropower resources, Nepal is one of the few places on earth, where electric mobility shall actually equate to zero emissions. Add that to the prospect of savings for Nepal by substituting imported fossil fuels, one can easily conclude that Nepal has only to gain from moving towards electric mobility. But ensuring optimum benefits of electric mobility shall require Nepal to strategically formulate policies with careful consideration to needs and economics constraints of Nepal. In order to do so, Nepal must evaluate current targets and policies and reconsider current targets, and finally, devise an elaborate strategy to obtain those targets.

The Second Nationally Determined Contribution (NDC) of Nepal sets an ambitious target of achieving 200 kilometers of electric rail network and reducing fossil fuel dependency for transportation by 28% by the end of 2030. The NDC also projects that 90% of all private passenger vehicles and 60% of all public passenger vehicle sold shall be electric by the end of the same year. These targets largely focus on sales, which if analyzed with the vulnerability of increased imports for Nepal, may be problematic. The Fifteenth Five Year Plan (2019/20-2023/24) by National Planning Commission (NPC) has set a target of increasing the shares of electric vehicle on transportation to 35% by 2023/24. The number may be unrealistic, but this may be a better way of setting electric mobility goals as it enables Nepal to seek additional ways to attain greater degree of electric mobility. Conversion of internal combustion engine to electric vehicle, also termed as retrofitting, is gaining attention internationally and for a country too concerned with dwindling foreign currency reserves, it may offer greater flexibility. National Innovation Center has been working to successfully retrofit EV propulsion system in an Internal Combustion Engine whereas some private participants are also eager to take steps in this regard. But without a government policy to guide such transformation, accompanied by clear and tangible provisions for incentives, any commercial application of such retrofitting may not even gain traction.

The fiscal policy for FY 2021/22 declared a vague plan to facilitate ten international electric vehicle manufactures to set up plants and produce EVs in Nepal. However, this policy lacked credibility right from the get-go as Nepal is not a remarkable market for such manufactures to set up shops. Three-wheelers serve as a backbone of rural and sub-urban transportation in many places of Nepal, and they can be viably manufactured and sold in Nepal. Additionally, two-wheelers EVs manufactured in Nepal may also find a viable business model in Nepal as two wheelers are already popular among Nepali mass because of their affordability and low maintenance features. Therefore, Nepal Government should look towards facilitating manufacturing of two-wheeler and three-wheeler EVs instead of selling a pipe dream of establishing a thriving auto industry manufacturing four-wheeler in Nepal.

But retrofitted EVs and locally manufactured two and three-wheeler EVs are just a piece of the puzzle. The product of retrofitting shall have limited appeal and application and consumers do not always make a responsible choice by sacrificing luxury, esteem and pride associated with a brand-new product. Additionally, two wheelers and three wheelers may not cater to mobility needs of all consumer classes. Finally, both cases are solution to displacing mostly petrol, which isn’t all that much. The statistics of Nepal Oil Corporation for FY 2020/21 indicates that Nepal’s diesel imports are almost thrice the amount of petrol imported while Foreign Trade Statistics for FY 2020/21 by Department of Customs shows that Nepal’s expenses for purchase of diesel is also almost thrice that of petrol. Therefore, our policies and targets have been downplaying the role of diesel vehicles in terms of pollution as well as expenses. So, Nepal’s target must be recalibrated towards substitution of diesel as well.

But substituting diesel is tricky. Diesel engine, with its ability to generate high torque even at low speed is used in vehicles like long route passenger bus, trucks, tippers, and other goods carriers to transport heavy payload through large distances and high elevations. Electric counterpart capable of substituting diesel engine are still a work in progress and even retrofitting of diesel engines will not likely yield effective solutions. It is here that policymakers need to cease thinking about electric vehicles and focus on electric mobility. Alternative to diesel may be sought in electric trains to connect different centers of the country and ropeways to connect production or import hubs and consumption centers. In the past, Nepal has had a remarkable history of ropeways where the mode of transportation had proved vital when Kathmandu valley suffered a natural blockade resulting from natural disasters. So, although electric trains and ropeways involve massive investment and infrastructures, they may even prove to be a more efficient and resilient mode of transportation given Nepal’s vulnerability to natural disasters.

To sum up, Nepal’s current targets pertaining to electric mobility are not strategically developed to deliver optimum benefits to Nepal. Something that should have been addressed through a proper strategy is so far being dealt largely through ad hoc policy decisions. The recent debate over customs duty exemptions to Electric Vehicle after the declaration of budget of Nepal for FY 2022/23 provides a clear example. National Action Plan for Electric Mobility prepared by Global Green Growth Institute in 2018 had, among other things, pointed out the necessity of a definite directive for electric mobility and a unit/taskforce for electric mobility for Nepal. Now in light of issues like increasing trade deficit and thinning foreign currency reserve, it has become more necessary than ever to strategize electric mobility to work for Nepal. So, it’s vital that Nepal government formulates and implements a strategy on electric mobility which sets realistic, need driven targets, makes provisions for facilitation, incentivizing and subsidization for various market participants, assigns definite roles and responsibilities to institutions, and defines a methodology to map success as well as revision of targets and provisions as per latest development. The strategy must also prioritize restructuring and adjusting consumer electricity tariff so that there’s no surge in demand of electricity during peak hours due to electric vehicles and the electricity in the off-peak hours doesn’t go to waste. The policy document must also seek to foster innovation and competition in terms of electric mobility so as to deliver benefits to wide range of people. Therefore, it is pertinent that Nepal shape its electric mobility strategy according to Nepal’s need and constraints so that Nepal has a chance of receiving optimum benefits from advancing towards electric mobility.