The federal government has been forced to implement significant policy shifts within its ambitious electric vehicle incentive program following a lackluster response from commercial banks. Recent data presented to the Economic Coordination Committee reveals that banks have shown minimal enthusiasm for the Prime Minister’s subsidized electric bike initiative, approving a mere 4,075 applications out of nearly 45,000 submitted. This represents an approval rate of approximately 9 percent, a figure that has sounded alarms within the corridors of power as the state risks missing its annual distribution target of 116,000 units by a wide margin.
The Pakistan Accelerated Vehicle Electrification program was initially launched with the goal of reducing the country’s reliance on imported fuel by incentivizing the transition from conventional combustion engines to electric power. Funding for this initiative is derived from a 2.5 rupee climate support levy on every litre of petrol and diesel, a tax that is expected to double by July under agreements with the International Monetary Fund. Despite having a dedicated 9 billion rupee allocation for the current fiscal year, the actual rollout has been hindered by rigid banking processes, with only 4.5 percent of the total annual target achieved as the June 30 deadline approaches.
In response to these bottlenecks, the ECC has approved a strategic pivot to the self-financing model to minimize the role of financial institutions. While banks processed only 22 percent of the applications sent their way, the self-finance route saw a nearly 100 percent success rate among applicants. Under the revised second phase of the PAVE scheme, the government will promote an option where buyers can receive their vehicles directly from suppliers after paying the price minus the applicable subsidy. This move is designed to simplify the acquisition process and ensure that the allocated funds reach the public more efficiently.
A specialized component of the revamped policy also targets government servants in grades 16 and below. Eligible officials will be able to secure an electric bike with an upfront payment of only 10,000 rupees, or 100,000 rupees for a rickshaw or loader, with the remaining balance settled in installments without interest charges. Furthermore, to encourage academic excellence and green mobility among the youth, the government plans to distribute 600 electric bikes to top-performing college students across 26 boards of education. These measures are intended to broaden the reach of the subsidy and ensure that the benefits of the new energy transition are felt across diverse segments of society.
Beyond individual ownership, the government is also looking at large-scale impact through a fast-track adoption plan. This involves rolling out an additional 100,000 electric bikes within three months by utilizing existing kits already available in the country. This accelerated phase is expected to save millions of liters of petrol, translating into an estimated 222 million dollars in foreign exchange savings over the next five years. By removing the banking hurdles and streamlining the subsidy disbursement through the Engineering Development Board, the government hopes to regain public confidence and stay on course toward its long-term goals for energy security and environmental sustainability.
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