Towards a new transport policy | Sunday Observer

Towards a new transport policy

19 November, 2017

If there is one lesson that we can learn from the recent fuel shortage, it is that we should drastically reduce our dependence on fossil fuels and move towards renewable or alternative energies. It is not only vehicles that are powered by fossil fuels – most of our power plants are now thermal. This shows just how vulnerable we are to a fuel shortage, strike or other crisis.

We need a visionary approach to realize the goal of a fossil-fuel free Sri Lanka. A few years ago, the Government started providing tax and duty concessions for all-electric and hybrid vehicles and now we have thousands of such vehicles on the roads. Yet, there was no timeline, deadline or framework for phasing out conventional fuel vehicles – until now.

With Budget 2018, Finance and Media Minister Mangala Samaraweera has announced a definite cut-off date for the usage of fossil fuel vehicles – 2040, just 22 years away. This is a step in the right direction. Several other countries, including, UK and China have settled on the same year to phase out fossil fuel vehicles, so the deadline appears to be perfectly feasible. Better still, the entire Sri Lanka Government vehicle fleet (with the possible exception of certain types of vehicles used by the Armed Forces) will be either electric or hybrid by 2025.

Charging stations

The time to start the conversion is now, as almost every major manufacturer already has or will soon be having electric and/or hybrid models in their portfolio. Some manufacturers will even have separate ‘electric-only’ brands to distinguish their offerings from the hordes – Volvo, for example, will build fully electric cars under the new ‘Polestar’ brand from 2019.

To counter the “chicken and egg” situation faced by electric cars (lack of charging infrastructure may deter the purchase of electric cars), the Government plans to build charging stations islandwide, the minimum requirement being 63. The Government should also invite all-electric car makers such as Tesla to launch here officially, since they build the charging infrastructure at no cost to the host country.

However, to ensure that owners do not charge their cars using fossil-fuel generated mains electricity, which negates the whole purpose of having electric cars, the construction of solar-powered charging stations should be encouraged. The Government should also consider setting up hydrogen filling stations as two Japanese manufacturers - Honda (Clarity) and Toyota (Mirai) already have hydrogen fuel cell powered cars on the road in several countries. These cars will be commonplace in the next decade.

The Government deserves plaudits for reducing duties on all-electric cars by at least Rs.1 million, but we feel that Plug-In Hybrid Electric Vehicles (PHEV) should also be included in this scheme, if they are capable of running on full electric power for at least 50 Km which is ideal for city running. Increasing taxes on luxury cars above 2.5 litre engine capacity is a good move, but it remains to be seen whether this will be applicable to the so-called permit vehicles.

It is no secret that most of these ultra-luxury vehicles are bought on various permits which do not attract any conventional duties. These vehicles are then sold to third parties keeping a healthy profit margin. Ideally, there should be no permits for any category – the duty structure should be rationalized so that there is a level playing field for everyone. Frankly, one wonders why our politicians need huge Landcruiser 200s to serve the people – a vehicle such as a double cab is more than enough for traversing any terrain and they can be fitted with luxury trims too. A base model Landcruiser 200 GX costs A$ 85,000, which is around Rs.10 million on a duty free basis, whereas, a base model HiLux costs less than half that on the same basis.

The Budget also promised to reform the existing levies for fuel vehicles based on their engine capacities. Most small cars below 1.5 litre engine capacity remained prohibitively expensive, as taxes can run as high as 175 percent of the CIF (Cost, Insurance and Freight) value of the vehicle. Some of these taxes have been brought down, so that more people would be able to afford a small car. They do have hybrid-like fuel performance, so there will be a forex saving in the long run. However, due to tax measuring adjustments the prices of certain hybrid cars have actually gone up according to trade sources. This could have a detrimental effect in the long run.

Many small cars lack standard safety features such as, SRS Airbags and ABS brakes which are taken for granted in cars just a class above. The Government deserves praise for addressing this issue through Budget 2018, as cars which do not have airbags will be banned from entering the country soon. This measure will save countless lives in the long run.

Carbon Tax

It was somewhat disappointing to note that the Budget did not impose higher taxes on all three-wheelers, which have reached a saturation point. Instead, only diesel three wheelers have been targeted for a Rs.50,000 duty hike. It is a good measure given the polluting nature of diesel, but this is one area where the public expected more. After all, the main three wheeler association itself has called for restricting their imports. Encouraging electric three wheelers will not be a permanent solution, since any kind of three wheeler is a fundamentally unsafe vehicle. We hope that small car prices would become more competitive, to the point where buying a three-wheeler will be out of the question. The authorities should also announce a date for phasing out three wheelers at least from the cities and also allow quadricycles, a possible replacement for three wheelers. In the meantime, the proposal to establish a three wheeler regulatory authority is a timely move.

A controversy has already erupted on social media regarding the ‘Carbon Tax’ on motorcycles, cars and buses, which for a car will be roughly Rs.650 for a whole year. This is quite reasonable, but more details should be provided on the method of collection and the intended uses.

Everyone in Sri Lanka wants to buy a private vehicle, at least a motorcycle, because our public transport system is not up to par. However, a clean, punctual, comfortable public transport system will no doubt drive more people away from cars. In the long term, it might obviate the need to buy cars altogether. Part of this puzzle will be solved with the commencement of the Colombo Light Rail Transit project. The Government through Budget 2018 has allocated Rs.500 million to import 50 brand new electric buses to the SLTB. This is a good start that will set the course for 2040. 

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