OVER DELAYED PHASING OUT OF 2-STROKE RICKSHAWS
Nov 21 - 27, 2011
What do you call it other than a contempt of court that Sindh government is dragging its feet over the plain order of the Sindh High Court (SHC) four years ago that it should take action against two-stroke rickshaws?
In 2007, the Sindh transport department was ordered by the SHC to take action against smoke-emitting vehicles, following which the Sindh government banned 2-stroke engine rickshaws. The decision to ban 2-stroke rickshaws was highly criticized by the Karachi Taxi and Motor Rickshaw Owners Association that asked the provincial government for a phase-wise conversion campaign, and negotiated a period of three years, ending June 30, 2010, for conversion of all 2-stroke rickshaws to 4-stroke.
Later on, at the behest of rickshaw mafia, the Sindh government decided to extend the deadline by one year, which too has expired on June 30, 2011.
An estimated 55,000 to 60,000 2-stroke rickshaws in Sindh continue to emit poisonous smoke, pollute the air, and make unbearable noise, particularly in the city of Karachi, where an estimated 42,000 to 45,000 2-stroke rickshaws ply on roads and in streets.
Although a lot has been written about the negative effects of these blasting machines on the environment and health of citizens, hardly any attention is focused on why the rickshaw owners aren't willing to convert their 2-stroke rickshaws into 4-stroke.
The demand to get these rickshaws off the roads is logical from the taxpayers' perspective as well, but the equation is not that simple from a rickshaw driver's point of view, whose bread and butter can be put at stake. "What are we going to do?" questioned some rickshaw drivers.
Since the government ban of 2007, the market price of a 2-stroke rickshaw has dipped from an estimated Rs200,000 per rickshaw to only about Rs35,000 to 45,000 currently. It is obvious that 2-stroke rickshaw owners will not be able to get anything for their investment.
A 4-stroke engine, both petrol and CNG, rickshaw, on the other hand, costs around Rs175,000-190,000, depending on the make and model, while the cost of conversion to a 4-stroke engine is an estimated Rs80,000-90,000, excluding labor cost.
Two-stroke owners cannot afford the cost of conversion or newer, environment-friendly version. Moreover, a lot of rickshaw drivers don't own the vehicle and operate it on "bharaa" (daily rent) basis. These drivers cannot afford to buy a 4-stroke rickshaw or a new engine.
Even though, 4-stroke rickshaws have greater seating capacity, more leg-room, lower emissions, and no noise, they are not very durable and very costly to maintain.
Because of lack of durability and high maintenance costs, the expected useful life of the vehicle is perceived to be low due to which existing rickshaw owners are reluctant to invest in the asset. Therefore, the 4-stroke version might be a better performer from a consumers' point of view but it is not a long-term and profitable investment for an operator.
The primary concerns of existing 2-strokers are, therefore, the lack of funding for and the lack of investment durability. Assuming that the average cost of a 4-stroke rickshaw is Rs175,000, the provincial government would need Rs7 billion to morph thousands of two-stroke rickshaws.
The provincial government cannot be expected to provide these funds as grant due to lack of fiscal space, neither can the rickshaw owners be expected to bear full cost or even 50 per cent of the cost of a new rickshaw.
In such a scenario, the government can encourage commercial banks to provide interest-free loans for the purchase of new rickshaws and can recover the loan by fixing a monthly bhaara (monthly rent) with the rickshaw owners.
Four-stroke tenants pay Rs250-350 per day to their owners. If the government negotiates a daily rent of Rs250, the monthly rent would amount to Rs7,500 and the government would be able to recover the cost within two years.
Similarly, assuming that the cost of conversion is Rs90,000, the government would need Rs3.6 billion for the conversion. A daily rent of Rs150 would amount to a monthly rent of Rs4,500 and the government would be able to recover the cost of the engines within two years.
The provincial government's conversion campaign, therefore, will only be successful if the concerns of 2-stroke owners are taken into account and if financial support is provided.
Without a proper cost and benefit analysis, and a planned phase-wise conversion campaign, the 2-stroke rickshaw cannot be expected to go off the road anytime soon.
The author is an assistant professor at SZABIST and teaches Economics and Finance.