The Asian Development Bank (ADB) has warned that Pakistan’s road infrastructure and finances could face significant challenges as the country transitions to electric vehicles (EVs), potentially leading to billions in lost fuel tax revenue.
In its study titled “Road Maintenance Financing and Cost Recovery Options”, the ADB highlights that Pakistan currently generates $5.68 billion annually from gasoline taxes—over 80% of the country’s road user revenue.
This critical funding source may dwindle as EV adoption grows, leaving only 35% of the necessary funds for road maintenance. Pakistan’s extensive road network spans 500,750 km, of which 40% is paved. However, the annual road maintenance budget of $1.53 billion meets just 44% of the $3.47 billion required for upkeep, despite total road user revenues of $6.89 billion.
The study also underscores the broader economic risks associated with the shift to EVs. Petrol taxes are a cornerstone of federal revenue, with the government targeting petroleum levy collections of Rs 920 billion for FY24. With the transportation sector consuming 90% of petroleum fuel, reduced fuel usage could trigger a “death spiral,” affecting grid revenues, increasing electricity tariffs, and accelerating a move away from traditional energy sources.
While financial incentives are expected to encourage EV adoption, the report identifies significant barriers, including inadequate charging infrastructure and limitations in the power grid. The transition will also require addressing manufacturing and import challenges for EVs.
Pakistan’s National Electric Vehicle Policy (2021) aims to have 50% of two- and three-wheelers and 30% of cars powered by electricity by 2030.
