Credit Guarantee Schemes for EVs on the Cards

The government is likely to introduce a credit guarantee scheme for electric vehicles (EVs) through the State Bank of Pakistan (SBP) and fix an interest rate equal to KIBOR, according to the latest report published by Business Recorder.

The decision was taken at a recent inter-ministerial meeting, presided over by the Secretary of Industries and Production, and attended by representatives of the Ministry of Energy, NEECA (National Energy Efficiency & Conservation Authority), Commerce, Ministry of Science & Technology, and Ministry of Finance, etc. The meeting discussed access to financing which is one of the major problems due to which the EV penetration in the market is low.

Secretary, MoI&P, emphasized that SBP can be consulted for the announcement of a financing scheme and EV manufacturers may be given a role to manage loans themselves. He proposed that the interest rate may be equal to KIBOR in order to promote the sector.

The representative of MS Auto, an electric motorcycle manufacturing company, emphasized that the payment of input cost at the procurement stage of localized components becomes a cost as sales tax is 18% at the sales stage. Responding to this, the Secretary MoI&P stated that EV manufacturers may get their claim right in tax returns on sales tax on local production and FBR may devise a mechanism for the same. He further added that Provincial Excise & Transport authorities, PSQCA, and FBR may also be invited in the next working group meeting to propose solutions for highlighted problems.

Additional Secretary-II MoI&P emphasized the need for defining categories for registration which will solve the problem of EV manufacturers as their registration is not being carried out uniformly across the country. In a few cases such as electric rickshaw, the registration is not being carried out by the provincial authorities despite being approved by EDB and PSQCA. He went on to advise that the EDB Act may be amended and accordingly accommodate the new requirements of the market.

CEO EDB stated that previously they were tasked to finalize the manufacturing regime for electric vehicles. However, SIFC requires improvement of the complete EV ecosystem. He highlighted that EDB has issued manufacturing licenses to 34 electric 2-3 wheeler manufacturers. He intimated that a 10-12 days time period is required for the grant of manufacturing certificates if the manufacturing facilities are complete. He further added that automation of the application procedure is being carried out in EDB and will take 15-20 days for its completion.

In reply to a query, GM (Policy) EDB noted that EDB does not charge a fee for issuing manufacturing licenses. He further stated that PSQCA also checks quality standards as per their domain. He suggested that representatives of PSQCA can simultaneously be included along with the visit of EDB’s Technical Team for verification of manufacturing facilities, which has participation from the government departments.

JS Tariff Ministry of Commerce stated that PSQCA charges a fee for testing road-worthy vehicles. He suggested declaring EV and conventional parts separately; otherwise, mixing can create problems. EDB checks in-house facilities and PSQCA checks quality standards. SOPs may be defined for EVs so as to not require cc and engine numbers. EV battery pack (up to 50KWH) category restriction should be removed.

The representative from the Ministry of Science and Technology suggested that charging infrastructures may be compulsorily installed on identified locations/ petrol stations by the Petroleum Division and further stated that a battery management system can be used to implement a loan management system. Shahzaib Amjad from M/s Jolta, Hassan from M/S Jaguar, and Ali Hameed from Sazgar Engineering Works also stated their issues and proposed the way forward.

The representative of NEECA stated that regulations are made which are under consideration of the NEECA Board. Further, a number of factors are considered for the installation of distribution support. One window operation facility is also incorporated in the regulation for facilitation on a fast-track basis.

After detailed discussion, the meeting took the following decisions: (i) EDB to take the lead role in the implementation of EV Policy in compliance with SIFC directive. If required a separate EV Cell in EDB may be created and capacity building/ new hiring may be carried out; (ii) application procedure to be simplified at the earliest and there should be no open-ended procedures for approvals of electric vehicles and special dispensation may be given to the sector on merit; (iii) coordination with Provincial Registration Authorities and Punjab Transport Authority for reduction in their fee structure applicable to different variants mainly EVs; (iv) credit guarantee scheme may be introduced through SBP. Finance Division may hold a meeting with SBP, World Bank, and EDB to explore funding options for the credit guarantee scheme; and (v) a possibility may be considered for the introduction of software battery management system) and stoppage of electric batteries on non-payment of loans.

Source: Business Recorder