ACC shocker for govt. electric vehicle policy

The commission has uncovered constitutional improprieties and a conflict of interest

Report 2014: The objectives of the government to import electric vehicles (EV) in the country may be noble but the decision, according to the Anti Corruption Commission, disregards the rule of law.

In its annual report 2014, the commission stated that the government order on allowing import of second hand EVs has violated the provisions of the Constitution and the Rules and Procedures for Imports from Third Countries, 2001.

The report however states, “The review could not establish direct conflict between the private interests of the Prime Minister and the Government’s actions on import of EVs in the country.”

On March 10, 2014, the government approved the import of second hand electric Nissan Leaf vehicles with mileage less than 30,000km to be used as taxis in the country.  The move received strong objection from the National Council during its 13th session in June last year during a deliberation on a policy review the council had conducted on the decision.

Raising the same concerns, the commission’s report states, “Receiving EV gifts from NISSAN Motor Co. Ltd. (Japan) and Tesla Company (USA) has violated the provisions of the Gift Rules, 2009.”

The commission pointed out that the government signing memorandum of understandings (MoU) with these two companies has undermined provisions of the Constitution that provides for fair market competition and has given undue benefits to private interests of the two local dealers of NISSAN Motor and Mahindra Reva.

The MoU signed with NISSAN Motor, according to the report, contains the National Action Plan for EV, which, among others, contains details, such as the government plan for ‘All RGoB’s light vehicle fleet to be converted to EVs’, ‘implementing EV taxi fleet and EV transportation for tourist,” among others.

The National Action Plan for EV is the government’s policy matter, the report states, adding that the government makes policies with general purpose or tendency considered as directed to the welfare or prosperity of the State and to enhance market competitiveness. “The Government’s initiatives on the import of EVs in the country appear to unfairly benefit a select few.”

Following 142 days of investigation into this case of “conflict of interest in the government’s initiatives on the import of EVs,” the commission’s chairperson personally shared the report with the prime minister on March 6 this year, according to the commission’s case log sheet.

Commission officials said they are yet to hear from the prime minister on the report.

The report states that the prime minister made a verbal request to the commission to investigate this issue of conflict of interest during the launch of National Integrity and Anti-Corruption Strategy 2014-2018 on June 23, 2014.

The same day, the request was formally communicated by the cabinet secretariat to conduct a thorough study and to submit the findings to the government for its consideration.

The commission reviewed the case to establish intention and identify red flags for the government to make interventions in minimising such risks in the future.

“The review did not assess the efficacy of the Government’s policy on EV as it is not the ACC’s mandate,” the report states.

On October 25, 2013, in his Friday Forum inaugural address at the Royal Institute for Governance and Strategy Studies in Phuentsholing on “Bhutan, change and challenges”, the prime minister shared the idea of switching to electric cars as it conformed to the country’s policy of environmental conservation and as a possible remedy to the existing economic strain.

The cabinet was informed about EV developments on February 18, 2014 and on June 19, 2014, the government’s decision to import EVs was highlighted during the presentation of the State of the Nation Report to Parliament.

The report states that the government then took several initiatives to introduce EVs in the country.

“The Government allowed import of second hand EVs, signed MoUs with EV companies, namely NISSAN Motor Co. Ltd. (Japan) and Mahindra Reva Electric Vehicles Private Limited (India), launched their EV brands Nissan Leaf and Mahindra Reva e20 and also received three numbers of Nissan Leaf as gifts,” the report states.  Talks were also held with Mitsubishi Motors corporation (Japan) and BMW Group Asia to introduce their brands of EVs in the country.

On April 24 this year, Mitsubishi Motors corporation donated an electric car to the Gross National Happiness Commission.  According to the Annual Info-Comm and Transport Statistical Bulletin, 2015, there are 61 EVs registered in the country.

The report also states that, while the government had decided to import EVs as one of the measures to reduce pollution and also pressure on INR reserve, the decision was taken without any consultation with relevant stakeholders, cost benefit analysis and no policy documents on EVs.

Gift giving and taking between public officials and businesses is a serious issue, the commission states and that it’s important to consider why business firms want to gift EVs to the prime minister or a minister.

The argument that the gift is not for personal use of the public servant but intended for official use or to test the efficiency of the vehicles is not significant and besides the point, it states.

“What is significant is the role that the government plays in the procurement of the vehicles,” the report states. “Accepting gifts impedes open, transparent and fair procurement competitions and even if decisions are not affected, there is a differing public perception, which cannot be dismissed.”

The report recommends that it is imperative that the government of the day stresses the importance of rule of law as an essential element in addressing and preventing corruption.

“Particularly, when it comes to conflict of interests, it is important to address not only “actual”, but also “perceived” and “potential” conflict of interests.”

By Sonam Pelden

2 replies
  1. Sensitive
    Sensitive says:

    The unique thing about our democracy is that the ruling government is like that of dictatorship that turns deaf ears and blind eyes to any authority. No matter whatever ACC, NC Opposition party or the people suggest to the government of its misgivings, there is no response at all. Rule of law is applied only when it is convenient to the government. The import of secondhand E-cars may be in breach of country’s laws, but how do we convince the govt?

  2. irfan
    irfan says:

    This comment is not intended to be in conflict with the current report of ACC. There has been increased demand for EVs with new policies introduced by the Government with its long term vision, but dealers are also selling petrol or diesel models in good numbers. The automotive sector in the country has noticed increased number of vehicle dealers of different makes. Almost all makes available in the country through imports have strong global market presence with complete product portfolio, but not all models are either suited for the Bhutanese market or demanded by the local customers.

    So the point of debate is whether it actually makes sense to allow our dealers to sell different models from different makes under one roof. Vehicles need good maintenance, but the workshops and maintenance services in the country are still very concentrated. In a typical market like Bhutan, there is need for workshops that can service all makes and models. It’s there, but that will need expansions for quality service delivery across the country. Any expansions and automated up-gradations will need fresh investments and more human resource. With sophisticated and well equipped workshop facilities, policy makers can also consider allowing customization of vehicle models at dealer’s end. Do we need automobile dealers just to function as importers or just traders? Should they be allowed more space to grow? In many other markets automobile dealers are known for creating different automotive businesses. For that to happen, we need a centralized workshop facilities that’s not concentrated and dealerships that can sell different models of different makes.

    If some of these considerations become reality through new policies, even the ACC should be satisfied enough where many of these issues will probably not find any place in their future reports. When everything comes under one roof, the competition will be very transparent and purely demand driven through business strategy innovations at the ‘dealer to manufacturer’ level.

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