On increase in import duty of solar panels

The imposition of 10 per cent duty on import of solar panels and cells will have negative impact of such a move on domestic solar in Nigeria and will be detrimental to the Nigerian solar industry across the 36 states.

The increase in import duty is causing serious injury to the domestic industry, 10 per cent import duty increase will skyrocket the prices of solar products in Nigeria, and discourages individuals from opting for solar energy. Regulatory policies should be put in place to checkmate this. A legislative consideration to license entrepreneurs for co-sharing/ solar power distribution to neighbouring areas should be enacted.

Nigeria’s solar energy initiatives will face a setback as the government has proposed new import duty increase on solar panels from five to 10 per cent in the budget for fiscal 2018 to 2019. Many solar energy projects will fail because they lack proper planning and long-term government support on solar power in Nigeria. Lack of electricity extends the cycle of poverty.

“Nigeria’s aspiration for industrialisation cannot be achieved or poverty reduced significantly without a reliable source of cheap energy,” said Patrick M. Kormawa, Nigeria regional director for the United Nations Industrial Development Organisation (UNIDO).

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Imports of solar panel, the main component of a solar power system, will be subjected to 10 percent customs duty, VAT and other taxes, totaling an additional cost in the next fiscal year, whereas the sector has been enjoying five per cent duty. The move will escalate costs and affect solar energy ventures in Nigeria, which have already been planned and are being set up. The proposed imposition of 10 per cent duty on imports of solar panels will hurt green initiatives in Nigeria.

The proposed increase in import duty will lead to spiraling of the prices of solar panels that cost more than half of what is spent on installing solar systems. The increase in cost will affect the government’s bid to buy electricity from private solar power plants connected to the national grid. If the duty comes into effect, we will face difficulty and contracts will be renegotiated. The price of solar-panel-based electricity will increase.

Of several attempts made by the government to stabilise electricity in Nigeria, solar initiatives seem to have made much better headway. However, despite all of these attempts, there have been limitations. Most of these solar solutions can only power few appliances and are basically suited for use in rural areas.

Entrepreneurs, who have been showing interest in installing solar panels on rooftops of their factories, will not go ahead with the plan due to the price hike. It may be tough to attain the 10 percent renewable energy generation goal by 2020 after imposition of the import duty. The government should support local manufactures in other ways such as tax exemption. The duty hike will hurt the local industry. The government should have a comprehensive policy to help the local industry thrive.

Inwalomhe Donald,

Benin City