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kathmandu, Nepal

EVs in Nepal: It’s time to move beyond tax incentives, says former Minister Thapa


Jun 1, 2018

Nepali Congress’ Gagan Thapa is one of the first politicians in Nepal to advocate for phasing out fossil fuel-based cars in the country. Last year, he registered a proposal in Parliament to phase out fossil-fuelled vehicles by 2027. Thapa, who is now a member of the opposition, plans to re-register the proposal in the new Parliament in the near future. Abhaya Raj Joshi caught up with the former health minister to talk about his proposal and the road ahead for EVs in the country.


Could you tell us about the proposal you registered in Parliament last year?

The main issue we wanted to raise was that of public health. Our capital Kathmandu is a strange place as it is a valley. Its terrain cannot be compared to other cities. The geography of the Valley reduces the city’s capacity to deal with air pollution. Kathmandu is already polluted and in the next few years, the situation is going to get worse. Switching to EVs is not a matter of luxury, it is a matter of urgency.

The second issue we wanted to raise was that in a few months, we are going to have surplus electricity in the country. Looking at the industrial forecasts, we don’t see a drastic rise in demand for electricity. In the domestic sector also, the demand for electricity is not going to rise rapidly–I can only have so many bulbs or electric appliances at home. There will come a time when the government will have to issue a notice asking people to use more electric appliances!

The third issue is related to Nepal’s energy security. These days, we import a huge amount of fuel from India. During the blockade, we even tried to get oil from China. We are dependent on others for fuel without which we are left crippled. That is why we need to switch to EVs within the next 10 years.

What is the current state of the proposal you filed in Parliament?

The proposal was part of the business of the House. After its tenure ended, the proposal also became inactive. But our purpose has been served. We wanted to sensitise the lawmakers on the issue and that was what we achieved through the proposal.

After I was re-elected MP, I created a research grant for a group of young researchers to delve deeper into the issue. I want numbers on how the transition to EVs can be made effective. I will again file a new proposal after looking at the results of the study.

Government officials such as the then National Planning Commission Vice-chair Swarnim Wagle are a bit wary about giving more tax waivers to EVs as the automobile industry is one the biggest sources of revenue for the government.

That is why we are saying that we can first phase out fossil fuel cars in Kathmandu, and then in other parts of the country. I believe that after a few years, we would not need to provide tax subsidies to encourage people to buy cars. When we no longer need to provide a subsidy, the government’s revenue stream will also not be affected.

I am saying that the government needs to set a date for phasing out fossil-fuelled cars. Then the details on how the target can be achieved can be discussed.

The automobile dealers are one of the most organised traders in the country. Do you think they will be ready to switch to EVs?

As you know, Nepal does not have any automobile manufacturing plant. All vehicles that come into the country come from either India or other countries. When it comes to automobiles, Nepal is just an extended market for Indian car manufacturers. I don’t think automobile dealers will face any problem selling EVs as they do not manufacture it in Nepal. The demand for cars will continue to grow, and all they need to do is get the cars from India and sell them in Nepal–this is something they are already doing.

With more car makers in India and China manufacturing EVs, it will become easier for them to get the cars.

You were one of the first politicians to lobby for tax cuts on import of EVs. Do you think the government’s policy has achieved its intended results? Why is it still difficult to spot an EV on the busiest roads of Kathmandu?

Yes, I was one of the people who believed that when import taxes are cut, the EVs would get cheaper and more and more people would buy them. But it did not turn out that way. Now that I am also thinking of buying a car, I realise that the price of a car is not the only factor people are concerned with.

I realised that there are many other issues that need to be addressed before people even consider buying an EV. We need to have charging stations, we also need to have a wide range of options for potential buyers. All this can be categorised as ‘non-tax’ incentives. Similarly, we need to work on making our roads EV-friendly. If we do not provide these incentives, it will take more than a decade for EVs to be visible in Nepal. The government needs to act so that the transition takes place quickly. We are at a time when government policy has to create demand for EVs in the country.

What are the challenges EVs face in Nepal?

In Nepal, a car is not just a car. It is a manifestation of someone’s hard work. A typical car buyer in Nepal would have thought about buying a car for 10-12 years before actually buying one. I bought my first car 12 years ago, everyone in the family chipped in with some money for us to buy our first car. I think that this is one of the major challenges EVs face in the country. People do not change their cars quickly.

The other challenge is that potential car buyers still do not trust EVs. There are people who want to make a statement that they are doing their part to preserve the environment and they use EVs. But for many people, including my wife, an EV for a family car is not even on the menu!

Similarly, the public discourse on pollution in Kathmandu has not reached a point where EVs would be seen as a potential solution. The people believe that once the Melmachi Drinking Water Project is complete, the streets will become dust-free and that will ease pollution in the city. They do not know that particulate pollution, invisible to the eye, is more harmful.

What would be your suggestion to the government in this regard?

To start with, it needs to realise the urgency of the problem and then take steps with a goal in mind. It needs to tell the people why this transition is important. When the government sets a date for the transition, it would be easier for government agencies to prepare plans accordingly. But unfortunately, I do not see that happening at the moment.

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