ADB warns of revenue loss as Pakistan shifts to electric vehicles

November 26, 2024 (MLN): Pakistan, which is heavily dependent on fuel-based revenues, is set to suffer a significant decline as the population and the country transition to electric vehicles, according to the latest publication report by the Asian Development Bank (ADB).

The ADB revealed that revenue from fuel-based sources stands at $5.68bn, accounting for over 80% of road user revenues, the highest among the ten sample countries.

The loss of this revenue will result in the remaining road user revenues being able to cover only 35% of the road maintenance needs.

The revenue from the customs duty on vehicles will also be affected as the rates are set up to 98% lower for electric vehicles, potentially affecting a further $394 million in revenue.

The global lender further highlighted that the current number of registered electric vehicles is low.

The vehicle fleet includes large numbers of 2- and 3-wheelers (79% of registered vehicles) that will likely transition more quickly to electric.

Financial incentives for the import of electric vehicles and the introduction of domestic manufacturing capacity for electric vehicles are expected to further speed up the transition process.

However, the lack of charging infrastructure and the limited capacity of the electricity network will form impediments to the transition.

Referring to the road network, the ADB stated that Pakistan has a vast road network of 500,750 km, with a significant portion (40%) paved.

The average road density per area is 65 km per 100 km2 , but the road density per population is relatively low at 21 km per 1,000 people, as is the road density per GDP at 67 km per $20 billion GDP.

Road maintenance needs are average and are estimated to amount to $3,472 million per year, equivalent to 0.9% of GDP.

The allocated road maintenance budget of $1.527bn covers 44% of needs.

Road user revenues are average and amount to $6.897bn, forming two times the estimated road maintenance needs and 1.8% of GDP.

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