Government plans new EV strategy amid fuel price uncertainty

2026-03-23 - 08:41

Bhutan is accelerating its shift towards electric mobility as fuel prices hit record highs, exposing the country’s continued vulnerability to imported petroleum and global market volatility. The Ministry of Infrastructure and Transport (MoIT) confirmed that it is currently developing a comprehensive Electric Vehicle (EV) Strategy to guide the country’s transition, even as immediate measures such as the procurement of 45 electric buses and plans to introduce 100 EVs for government use are already underway. The move comes at a time when fuel prices in Bhutan have surged to their highest levels in recent years. As of 20th March 2026, diesel prices have reached to Nu 108.17 per litre and petrol Nu 85.3 in Thimphu. The spike, driven by rising global crude oil prices, currency fluctuations, and geopolitical tensions affecting supply routes, underscores Bhutan’s heavy reliance on imported fuel, primarily from India. Officials from MoIT said that electrification of the transport sector is being prioritized both as a strategic response to growing fuel price uncertainty and as a key climate initiative. “In the transport sector, we are mainstreaming electrification of public transport to reduce dependence on imported fuel as well as to capitalize on the climate action advantages,” the official said, adding that efforts are also underway to improve EV charging infrastructure nationwide. Despite EVs were introduced in Bhutan on 2014, adoption remains limited. According to Bhutan Construction and Transport Authority data, as of February 2026, the country has over 125,000 registered vehicles, but only around 1,200 are electric. According to the ministry, high upfront costs, range anxiety, and limited post-sale services continue to be key barriers to widespread adoption. To address these challenges, the upcoming EV Strategy is expected to outline measures such as innovative procurement models, performance-based tax incentives, expansion of charging infrastructure, and improvements in after-sales services. The government has already taken steps to expand charging infrastructure through collaboration with the Bhutan Power Corporation, under which the government provides financial support while the corporation manages operation and maintenance. In addition, financial incentives are being offered to encourage private individuals and businesses to install charging stations. Government support includes Nu 26,955 per month and payment of monthly electric bill to anyone who installs their own charging machines. This, the ministry said, is to encourage private individuals, especially hotel and business owners, to install their own EV charging machine in order to reduce dependence on public EV charging stations. While direct subsidies are considered unsustainable in the long term, the ministry said it is exploring alternative financing mechanisms, including blended financing and innovative procurement approaches. Bhutan’s push towards EVs also reflects a broader effort to align the transport sector with the country’s carbon-negative status and strengthen energy security. Although Bhutan generates hydroelectricity, it remains entirely dependent on imported fossil fuels for transport. The current fuel price surge has once again highlighted how global events directly impact domestic prices. Bhutan’s fuel rates are linked to Indian imports, which in turn are influenced by international crude oil markets. Past trends show similar volatility. In 2022, petrol prices had reached over Nu 95 per litre and diesel around Nu 100, before dropping significantly in 2023 to around Nu 66 and Nu 64 respectively. The sharp correction in 2023 also followed sustained scrutiny of fuel pricing. A series of investigative reports and editorials by The Bhutanese exposed discrepancies in fuel pricing and raised concerns over possible overcharging, prompting government intervention and engagement with Indian suppliers. The outcome was a notable reduction in fuel prices, offering relief to consumers and highlighting the role of public accountability in price regulation. However, such fluctuations have often translated into inconsistent transport costs, affecting the prices of goods and services across the country. With global uncertainties, including ongoing tensions in key oil transit regions, continuing to influence supply chains, fuel prices are expected to remain sensitive to external shocks. While concrete targets for EV adoption and fleet electrification will be defined in the upcoming strategy, the ministry indicated that a gradual shift from fuel-powered vehicles to electric alternatives is under active consideration. For Bhutan, the challenge now lies in balancing ambition with implementation ensuring that infrastructure, affordability, and policy support keep pace with the growing need to reduce complete dependence on fossil fuels.