To Buy or not to
Buy ?
================================================
That is the question that EESL should be asking
!
Economic Times ( 07 Oct ) carries following news
report :
“ EESL Plans to let Private
Sector into EV leasing “
Energy Efficiency Services (EESL)
plans to open up vehicle leasing programmes to private institutions in its push
towards vehicular electrification.
The firm, which
recently awarded a tender for procuring 10,000 electric vehicles (EVs), said
the contract was the first of many as there are over half a million vehicles with the Centre waiting
to be replaced with those equipped with electric power trains.
There are also
opportunities in the corporate market for leasing EVs.
EESL managing director Saurabh Kumar told ET, “ We may open
up to private institutions... They can set up charging points for vehicles leased in
the company name and
in that way avoid regulatory hurdles over the sale of electricity.”
At present, the
Electricity Act prohibits the sale of electricity by anyone except the
distribution licensee.
If a private firm sets
up charging points for
vehicles leased under the company name for use by employees, the regulatory
hurdle can be eased and at the same time, environmental concerns will stand
addressed.
“We have specified a
minimum range of 130 km for the EVs we are procuring in the tender. Most
vehicles used in intra-city operations cover a daily distance of 80 km.
Corporates can have
charging stations in offices for powering leased vehicles when idle. Even after taking the tariff for
electricity into account, the operating cost of an EV is one-sixth of that of a petrol one,” Kumar added
Bulk acquisition of EVs
by EESL, Kumar said, would help bring down purchase price and spur demand. “Leasing will work in
the commercial space.
And also help bring
down procurement costs,” said VG Ramakrishnan, managing partner, Avanteum Partners LLP.
Overall, EESL plans to
acquire 10000 electric vehicles for replacing the fleet in the power, coal, new
and renewable energy ministries by June 2018.
There is no doubt , as compared to
buying / owning EVs , private commercial companies would benefit by leasing out
the cars from EESL
Companies ( leasing the electric cars
from EESL ) , can write off the lease-rent as tax-deductible
expense
But EESL – the car-owning
company ( the company leasing out those cars ) , can only claim, 10 % depreciation !
And just sell off those “ owned “ cars as SCRAP , after 5 years !
Therefore , it makes sense , even for EESL itself , to float a tender for “ leasing “ rather than for “ buying “ those 10,000 cars
Apart from this , there are other
reasons why I advocated that EESL itself
should float a tender for “ Leasing “ instead of “ Buying “ those 10,000 EVs
Read my blogs :
=======================================================
EESL , lease cars ,
do not buy ! [ 16 Aug 2017 ]
=======================================================
Waiting to be proved wrong
! [ 30 Sept 2017 ]
PIYUSH PLAN ? [
27 March 2016 ]
=======================================================
And should EESL “ lease “ these cars from TATA / M&M , I
don’t think , there is any law which would prevent EESL to,
in turn , sub-lease these very cars to
government departments or to private commercial firms !
So , this leasing ( instead of buying )
, would save the government exchequer , a huge sum ( Rs 1100 crore ) by way of
initial investment
And , as explained in my above-mentioned blog :
EESL
could lease these ( 10,000 ) cars ( from TATA / M&M ) at Rs 15 per km
EESL
would sub-lease these to Govt Departments at Rs 27 per
km
Hence , per km , EESL would make a gross
margin of Rs 12 ( Rs 27 – Rs 15 )
For 20,000 km / year / car , that would
amount to gross margin of Rs 2.4
lakh
For 10,000 cars , that would add up to ,
Rs 240 Crore !
And , that Rs 15 / km ( Rs 3 lakh/car/year ) that EESL would pay to TATA / M&M by way of “
lease rent “ , would be treated as “ tax
deductible expense “ !
A neat sum of Rs 300 Crores !
IT MAY BE POSSIBLE TO
STILL AMEND THE ORDER FOR THE BALANCE 9,500 CARS
“ Outright Selling “ of cars by car-manufacturers , translates into “ Car Ownership “ ( for who-so-ever is the buyer , even a private
citizen )
This is something that Shri Nitin
Gadkari wants to get away from , in order to promote the concept of “ Car as a Transporting Service “ , through more public transport
No doubt , Electric Vehicles will reduce
air pollution
But “ Electric Public Transport “ will not only reduce air pollution , it will also
dramatically reduce “ Traffic
Congestion “
Question is :
How can government discourage “ Private Ownership “ of vehicles ( even if
electric ) and encourage “ Electric
public Transport “ ?
Here are some suggestions ( - some
covered by my earlier blogs ) :
======================================================
# Incentives to Electric Vehicle Manufacturers :
( to become global exporters of EV , as suggested by Shri Amitabh Kant , CEO
–
NITI Aayog )
Reduce
GST from 12 % to 5 %
Reduce
Customs Duty on Lithium-ion Batteries from 26.5 % to 12 %
Make
“ Lease Revenue “ exempt from
corporate income tax ( = cheap
self finance for working capital needs of the manufacturers ? )
Make
“ Scrap Value “ ( upon expiry of lease
term of leased cars ) , tax exempt
Make
available for FREE , ISRO technology for
50 Ah / 100 Ah lithium-ion battery packs
( under development by Automotive Research Association of India )
Direct
Benefit Transfer ( DBT ) of the Carbon
Credits earned , into the accounts of EV
Manufacturers , as detailed in earlier blog “ Piyush Plan
“
Only with such “ Out of the Box “
reforms , it will be possible for Auto Industry to gear up for a 10 % EV production increase each year , so as to reach 100 % in ten years , between 2020 – 2030
=======================================================
# Incentives to “ Electric Public Transport “ owners ( taxies / buses / rickshaws
etc ) :
No GST on provision of “ Transport Services “
to corporates or individuals
No road tax / municipal taxes
Free
charging at Charging Stations set up by PSUs (
NTPC – BHEL – IOC – HP )
Free
parking in “ Pay-and-Park “ plots
No income
tax ( personal or corporate ) on business
income
=======================================================
# Incentives to CITIZENS , for using PUBLIC TRANSPORT :
Incentive
Scheme for citizens who wish to exchange their existing petrol / diesel vehicles
( 2 wheeler / 4 wheeler ) for Electric Vehicles
Incentive
Scheme for citizens who do not own ANY vehicle
and buying an EV
======================================================
# Incentive for large
Co-operative Societies who come forward to set up Battery
Charging
Station within the society premises , for use by Members and the Public
======================================================
Dear Shri Gadkariji / Shri Amitabh Kantji :
I hope some of the above mentioned
suggestions will find a place in the Road Map for Electric Vehicles
11 Oct 2017
www.hemenparekh.in
/ blogs
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