Government's Proposed Credit Guarantee Scheme for EVs

Jawad

20 Feb 2024

279

Government's Proposed Credit Guarantee Scheme for EVs

The government is considering the introduction of a credit guarantee scheme for electric vehicles (EVs) through the State Bank of Pakistan (SBP). The scheme would involve fixing an interest rate equal to KIBOR, according to a report by Business Recorder.

Inter-Ministerial Meeting on EV Financing

The decision to explore a credit guarantee scheme was made at a recent inter-ministerial meeting, chaired by the Secretary of Industries and Production. Representatives from various ministries, including Energy, Commerce, Science & Technology, and Finance, were present. The meeting focused on the challenges faced by EV manufacturers in accessing financing, which has hindered the growth of the EV market.

Proposed Financing Scheme and Tax Relief

The Secretary of Industries and Production suggested consulting the SBP for the financing scheme and involving EV manufacturers in managing loans themselves. He also proposed setting the interest rate equal to KIBOR to promote the sector. Additionally, the meeting discussed the issue of sales tax on localized components and proposed that EV manufacturers could claim a refund on sales tax in their tax returns.

Addressing Registration and Quality Standards

The Additional Secretary-II of the Ministry of Industries and Production highlighted the need to define categories for EV registration to ensure uniformity across the country. He also suggested amending the EDB Act to accommodate the market's new requirements. The CEO of the Engineering Development Board (EDB) stated that the board had issued manufacturing licenses to 34 electric 2-3 wheeler manufacturers and was working to improve the EV ecosystem.

Streamlining Manufacturing and Quality Checks

The meeting also discussed the manufacturing process and quality standards. The GM (Policy) of the EDB noted that the board does not charge a fee for issuing manufacturing licenses and suggested including representatives from the Pakistan Standards and Quality Control Authority (PSQCA) during EDB's technical team visits for verification of manufacturing facilities.

Charging Infrastructure and Battery Management

The Ministry of Science and Technology proposed installing charging infrastructure at identified locations and petrol stations. The ministry also suggested using a battery management system for loan management. Representatives from Jolta, Jaguar, and Sazgar Engineering Works shared their issues and proposed solutions.

Regulatory Considerations and One-Window Operation

The National Energy Efficiency & Conservation Authority (NEECA) representative mentioned that regulations were under consideration by the NEECA Board. The meeting also discussed the installation of distribution support and the incorporation of a one-window operation facility in the regulation for fast-track facilitation.

Decisions and Next Steps

After detailed discussions, the meeting made several decisions, including EDB taking the lead role in implementing the EV policy, simplifying the application procedure, coordinating with provincial registration authorities, and introducing a credit guarantee scheme through SBP. The Finance Division was tasked with exploring funding options for the scheme. Additionally, the meeting considered the introduction of a software battery management system and the possibility of stopping electric batteries on non-payment of loans.

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