The Power for All has advised against Nigeria’s planned raise of import tax on solar panels and other alternative energy technologies entering the country, saying this may upset the expected benefits from the N1 billion solar funding scheme recently launched by the Bank of Industry (BoI).
Power for All, a global platform that campaigns for the use of renewable, decentralized electrification solutions as the fastest, most cost-effective and sustainable approach to universal energy access, said while the BoI fund plans to lower costs incurred by companies to deploy decentralized solar PV solutions to homes and communities, the new tariff hike could bring them back, thus dampening the market opportunities therein.
The Nigerian Customs recently indicated it will review import tariffs on goods including solar PV and related technologies, but the Nigeria Campaign Office of Power for All stated in a position paper it shared with OGN on the N1bn BoI in Abuja that an upward import tariff review on solar PV could take the wind off the sail of the BoI funding scheme.
It said: “To date, enterprises have been hampered by high interest rates and low awareness about the sector amongst financiers, limiting their ability to provide clean energy solutions to consumers at an affordable price. The BoI Solar Fund – with interest rates as low as seven per cent, flexible terms, and the support of State Governments and the United Nations Development Programme, will play a pivotal role in catalyzing rapid market growth.
“Yet the potential of the fund could be limited by the Government’s ambitions to raise taxes and tariffs on solar panels and technologies entering the country. Although the Solar Fund will help to lower the costs of decentralized solar companies, new or increased taxes and tariffs will raise them across the board – ultimately pushing up prices for consumers and dampening this un-paralleled opportunity to reach millions of Nigerians with clean energy services.”
It however explained in its advisory to the government on this: “Given the 100 million people in Nigeria currently living in energy poverty, and the impact that unreliable grid power and expensive back-up generation has on businesses across the country, any increased revenue from taxes and tariffs from the emerging solar market will be far surpassed by lost revenues and development opportunities the decentralized solar market will enable.
“In more advanced markets in East Africa, specifically in Kenya and Tanzania, there is a lot of evidence to show that elimination of taxes and tariffs were catalyst to the growth of the solar market in those countries. This means that large swathes of communities are benefitting from electrification through renewable energy which has led to a corresponding increase in economic activities in many of these regions as a whole.”