SOLAR PANELS AND THE GREEN INITIATIVES
The imposition of 10% duty on import of solar panels and cells will have negative impact 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% 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 licence entrepreneurs for cosharing/ 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 in the budget for fiscal 2018-19. 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).
Imports of solar panel, the main component of a solar power system, will be subjected to 10 per cent customs duty, VAT and other taxes, totalling an additional cost in the next fiscal year, whereas the sector has been enjoying 5% 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% duty on imports of solar panels will hurt green initiatives in Nigeria.
The proposed increase in import duty will lead to spiralling 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 is difficult to make solar irrigation projects viable even after the 10 per cent increase on import duty. Import duty would make the situation more unfavourable. It may be tough to attain the 10 per cent 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.
Under the WTO framework, a member country can impose a safeguard duty if the increased quantity of imports is either an absolute increase, or an increase relative to domestic production, which is causing severe damage or threat of serious injury to the domestic industry. “All over the world, the cost of solar panels is falling leading to increased adoption of renewable, but in Nigeria the cost of solar panel is increasing. Nigeria stands to lose out on the development because Nigeria currently does not have capacity to manufacture solar panels but does limited assembly in volumes that cannot meet market demand hence its recourse to importation while growing capacity locally.
The tariff will increase acquisition cost of solar panels in Nigeria which are currently heavily deplored in rural areas where purchasing power is low, adding that the development could derail Nigeria’s plan to generate 30 per cent of electricity through renewables by 2030. Nigerian government should take action especially as electricity has continued to be elusive to most citizens. Those who cannot buy generating sets are bound to stay in darkness yet at the end of every month, huge bills are given to Nigerians.
Solar power helps to slow/stop global warming. Global warming threatens the survival of human society, as well as the survival of countless species. Fortunately, decades (or even centuries) of research have led to efficient solar panel systems that create electricity without producing global warming pollution. Solar power is now one of the most important solutions to the global warming crisis. With this, the citizens are left with no options than to engage those who can install the different bulbs and begin to light up their environment.
Inwalomhe Donald, Benin City