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Renewable energy to boost employment as FG reverses VAT imposition

Investors in Nigeria’s renewable energy sector can now heave a sigh of relief as the Federal Government of Nigeria recommends that eight imported items be exempted from value-added tax. This will boost economic activities in the sector and drive employment.

Wind-powered generators, solar powered generators and solar cells whether or not in modules or made up into panels are among the eight renewable energy equipment that made the list of recommended items for VAT exemption in the number 18, volume 107 of the Federal Republic of Nigeria Official Gazette.

Others are photosensitive semiconductor devices, solar DC generators of an output not exceeding 750 Watts (W); solar DC generators of an output exceeding 750 W but not exceeding 75 kW. Solar DC generators of an output exceeding 75 kW not exceeding 375 kW and solar DC generators of an output exceeding 375 kW also made the list.

“A big thank you to the Federal Government of Nigeria, the Ministry of Finance and the Legislature, for pulling this through,” Adetayo Adegbemle, executive director PowerUp Nigeria said.

Last year, experts under the platform of Environmental Rights Action/ Friends of the Earth, Nigeria (ERA/FoEN), called on the National Assembly to make laws for more relaxed fiscal policies for renewable energy products.

Godwin Ojo, executive director of the organisation, said the reduction in taxes will facilitate growth in the sector.

Since January 2018, the Nigerian Customs has been demanding payment of 5 percent duty and an additional 5 percent VAT on solar panels imported into the country citing obedience to Federal Government’s fiscal policy, which contradicts the country’s power aspirations.

Beyond pursuing climate goals, many governments are prioritising renewable energy as a driver of economic growth through the creation of job opportunities a scenario that holds many lessons for Nigeria currently struggling with a rising unemployment rate.

In highly populated countries like China, Brazil, United States and India

the rise of decentralised renewable energy as a solution to electrification problem is also bringing with it a solution to high unemployment.

As global energy transformation continues to gain momentum, this employment dimension ensures socio-economic sustainability and provides yet another reason for countries to commit to renewables a situation Africa’s largest economy has been struggling with rising unemployment in the past four years can learn from.

“The present FG increased Import Duty and imposed VAT on renewable energy products in 2015. This of course, led to difficulties in the clearing of imported products at the port, with its attendant increase/rise in renewable energy products in the market,” Adegbemle said.