Electric vehicles need a policy change

The insurance from the Ministry of Economic Affairs had not prevented motorists from crowding into service stations in Thimphu. The rush, whether it fears another price hike or a shortage, will unfortunately be a regular scene. Supply disruptions would become more frequent and demand would still be on the rise.

The writing was there on the wall. The number of vehicles is increasing faster than the rate of fuel increase. When the Ministry of Information and Communication prepared the second draft National Transport Policy, 2017, there were 83,000 registered vehicles in the country. Since then, we have added more than 7,000 vehicles, on average, to our roads each year. The policy, comprehensive as it is, after five years is still not approved.

Recent incidents of fuel shortages and rising prices should attract political attention. For starters, the draft policy that is now at the Gross National Commission Secretariat should be given some urgency. Current world events are forcing many governments to review their policies – from food and energy security to import dependency. This is an opportunity for Bhutan to review our policies.

The statistics are frightening. The country’s biggest export, hydroelectricity, cannot meet fossil fuel demand. In 2020, our overall trade balance, including electricity, was around Nu 18.38 billion in the red. Half of the import bill comes from importing fossil fuels. It would be worse when the next report comes out with more imported vehicles and higher gasoline and diesel prices. Worse, we have no control over the price of importing fossil fuels and even exporting electricity.

Bhutan should have a policy to promote not only efficient or affordable transport systems, but also sustainable and environmentally friendly ones. The current position we find ourselves in is a good time. Going electric is a good opportunity. But electric vehicles (EVs) are expensive and out of reach for many. This is where some policy interventions could encourage people to switch to electric vehicles.

Is it too much to ask financial institutions to grant cheaper loans with longer repayment terms to first-time car buyers? The electric taxi project is a success thanks to the subsidies. It would be too much to extend the subsidy to all car buyers, but making it affordable through programs like cheaper loans could entice many to go electric. Cheap loans and smart programs were the reasons for the uncontrolled growth in the number of vehicles.

Electric vehicles need a reliable infrastructure. There must be enough charging stations across the country, repair shops for electric vehicles and our roads must be adapted to electric vehicles (smoother). And there could be incentives like tax breaks on electric vehicles and their spare parts. There are calls to remove the green tax on fossil fuels to bring down the cost of fuel. It should be the reverse. Lucrative subsidies on electric vehicles and a surcharge on diesel or gas-powered luxury cars, second or third cars could discourage people from buying gas-powered cars.

Another policy should be to scrap old vehicles after a certain period of time. Older vehicles are fuel-hungry and not very environmentally friendly. Many countries do not allow vehicles over 20 years old. Some of the vehicles on our roads are older than the drivers or owners.

We have been praised for our environmental policies, replacing 50% of the vehicles on our roads with electric vehicles, excluding heavy vehicles, would be another feather on our ceiling. It would also help us in our trade balance.

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