Mohammad Moosa has never been to a petrol bunk in the last two years. He rides an electric scooter which touches a maximum speed of 40 kmph. “It does not have a clutch or a gear and I feel like I am floating through air when I am riding the bike,” says Mr.Moosa. But in the middle of an upswing in petrol prices, he is about to sell his electric vehicle and return to the “luxury product.”
His quandary stems out of the stark anomalies in fuel pricing strategies. While cleaner technologies such as hybrid and electric options receive no subsidy, thereby making them economically unattractive, highly polluting fuels such as diesel continue to enjoy low retail prices. While petrol sells at Rs.67, the rate per litre of diesel is about Rs.40. Much of the benefit goes to the owners of luxury cars and Sports Utility Vehicles (SUVs).
Of the nearly 150 cars that get registered in the city every day, almost 30 per cent have been diesel variants in recent months. Industry insiders say that by 2013, more than 40 per cent of all cars that are sold in the country would be diesel-based.
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On the other hand, people such as Mr.Moosa, who are early adopters of cleaner technologies, sell off their vehicle, unable to afford to change the electric battery that costs Rs.10,000 once every two years.
S.G. Murali, executive vice-president, TVS Motors, says that without improvements to battery technology and bringing down cost through cross-subsidy, electric vehicles will remain unviable. The company recently stopped producing its only two-wheeler electric variant.
While the argument has been that hiking diesel prices would lead to rise in prices of other commodities and hence need to be controlled, Anumita Roychowdhury, associate director of the New Delhi-based Centre for Science and Environment, says that the high-end car segment is now the second-largest consumer of diesel in the country.
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This trend has serious public health ramifications since diesel is about seven times more polluting than petrol and the car population in Chennai nearly tripled in the last 10 years.
Economists such as Kirit S. Parikh, who headed the committee that recommended the deregulation of both petrol and diesel prices last year, say: “Though cheap diesel is a problem, it is impractical to have a different pricing mechanism for car owners.”
If differential pricing is not feasible, Ms.Roychowdhury argues that an additional levy should be introduced on diesel cars.
She also points to the Delhi government's Air Ambient Fund, which diverts 40 paise from each litre of diesel sold towards a dedicated fund that supports the introduction of electric vehicles.
Moving beyond the contentious issue of where subsidies are really required, Shreya Gadepalli, director, Institute for Transportation and Development Policy, says: “Even if you have the cleanest of fuels and you don't pollute that much, the roads would still be congested. The government must focus on mobility and space-efficient means of transport. From an equity point of view, whether it is diesel or an electric car, it is still taking the same road space. Private vehicles are congesting the roads and delaying others, especially public transit users. That is a huge societal cost.”