ISLAMABAD: The Federal Government’s E-Bikes/ Rickshaws Scheme will be for up to 15,000 applicants and in case applicants are more than the threshold, Prime Minister’s Youth Business & Agriculture Loan Scheme (PMYB&ALS) will conduct a ballot, well-informed sources told Business Recorder.
Sharing the details, sources said, on April 13, 2023, Ministry of Industries and Production briefed the ECC that in order to facilitate the manufacturing of Electric Vehicles (EV) in the country, the Federal Government had allowed import of Electric Vehicles’ specific parts at the rate of 1% Customs Duty and 1% Sales Tax.
The approved incentives were incorporated in the clause 3.3 of Auto Industry Development and Export Policy (AIDEP 2021-26). Ministry of Climate Change, in its EV Policy 2019, had set the EV penetration target of 50% of new sales of two and three-wheelers EVs by 2030.
E-bikes/e-rickshaws: PMYB&ALS model approved by ECC
To complement the objectives and the fiscal measures covering the supply side, the Prime Minister constituted a Committee to explore the viability of E-Bikes and incentive structure to make E-Bikes affordable. On the basis of the recommendations of the Committee, a comprehensive presentation on E-Bikes was made to the Federal Government on December 28, 2022.
Following were the salient facts and figures of the presentation: (i) more than 26.3 million motorcycles are in the country; (ii) annual market size of motorcycles is more than 2 million which are produced locally; (iii) existing bikes on the road consume fuel of $3 billion annually; (iv) EDB has issued twenty-two manufacturing licenses to manufacturers of E-Bikes; and (v) 7,377 units of electric motorcycles were manufactured in 2021-22.
The forum was further informed that average cost of an E-Bike with a Lithium battery and specific standards was Rs 190,000. The high price rendered EV penetration in the country low. In order to create quick and sustainable demand of E-Bikes/ Rickshaws in the country, four financing schemes based on different criteria were proposed which are as follows:
Scheme-1-Cash Purchase Model: (i) government sharing Rs 100,000 through banks as processing agents; and (ii) consumer lump sum sharing PKR 90,000 from own sources.
Scheme-2-Price Sharing Model: (i) Rs 100,000 on sharing basis (Govt. share 90 per cent, customer share 10 per cent) Rs 90,000 as loan from banks (24 months); and (ii) 50% Credit Guarantee by government to the banks.
Scheme-3-Easy Loan Model: (i) 30 per cent down payment by consumers; (ii) 36 months’ loan tenure; and (iii) 23% interest rate with the government picking up only 50% of the interest rate over a three year leasing period, 50% Credit Guarantee by the government.
Scheme 4: Prime Minister’s Youth Business & Agriculture Loan Scheme(PMYB&ALS) Model for E-Bikes/ E-Rickshaws: (i) the clean loan up to Rs 0.5 million is available under Tier-1 (T1) of PMYB&ALS on personal guarantee at the rate of 0% mark-up; (ii) loan payment in three years; (iii) to explore the option, a meeting with representatives of the following stakeholders was held on March 10, 2023- (a) Prime Minister’s Youth Programme, (b) State Bank of Pakistan, (c) The Bank of Punjab, (d) two and three Wheelers Electric Vehicle Manufacturers and (e) National Rural Support Programme (NRSP); (iv) all stakeholders supported the scheme; and (v) appropriate amendments in the Prime Minister’s Youth Business and Agriculture Loan Scheme for E-Bikes and E-Rickshaws, if deemed necessary.
Ministry of Industries and Production apprised that the four schemes were different in terms of financial requirements and would require financing either from the government or commercial banks. It was stated that all relevant stakeholders were consulted who supported the proposals.
However, Finance Division did not support the first three proposals due to financial constraints. Keeping in view the comments of the Finance Division, a fourth option was explored and extensively discussed with all the relevant stakeholders.
Ministry of Industries and Production further apprised that given the prevailing economic scenario and available financial resources, the Ministry proposed Scheme 4 is the most workable option to induce demand for E-Bikes and E-Rickshaws in the domestic market. To implement the proposal given in the fourth Scheme, a portion of already allocated funds for PMYB&ALS may be earmarked for the uptake of E-Bikes/ E-Rickshaws in the country.
The Economic Coordination Committee (ECC) approved proposed scheme 4 for up to 15,000 e-bikes/ rickshaws. If the number of applicants is more than 15,000, PMYB&AC will conduct balloting.
Copyright Business Recorder, 2023