Energy experts are worried that the recent 10 percent duty hike on solar panels by the Federal Government will adversely affect the chances of improving coverage for over 95 million Nigerians who are connected to the grid.
Their worries are further compounded by the fact that Nigeria currently does not have the capacity to manufacture solar panels in volumes that can meet market demand, hence recourse to importation of key equipment for the production while also growing local capacity.
The Renewable Energy Association of Nigeria (REAN), a leading private sector renewable energy group in Nigeria, had raised the concern that their members were being forced to pay 5 percent – 10 percent import duty on solar panels by the Nigeria Customs Service.
According to the REAN, the tariff hike will increase acquisition cost of solar panels, which are currently heavily deplored in rural areas where purchasing power is low, as the hike can derail Nigerian’s plan to generate 30 percent of electricity through renewables by 2030.
The group confirmed through its president, Segun Adaju, that under the Common External Tariff (CET) code 8541.4010.00 – a classification for import duty tariff – import on solar panels should be 0 percent.
The REAN noted that as a result of the hike, discharge of goods from the ports had been slowed down immensely and demurrage charges had risen for its members since the start of the year.
Apart from the REAN, analysts are worried the 10 percent import duty on solar panels had slowed down discharge of solar panel goods at the ports, pointing out that demurrage charges had risen for local industry players.
Ify Malo, a renewable energy expert and campaign manager, Power for All in Nigeria, said the duty on the solar panel could be a clog in the wheel for the Federal Government’s plan of generating 3,000mw through off-grid solutions.
However, Joseph Attah, Nigeria Customs Service spokesperson, clarified in a telephone conversation with BusinessDay on Friday that the hike was a fiscal policy issue of the Federal Government and must be addressed as such.
According to Attah, the importation of the solar panel as categorised as ’85-41′ still comes in with zero duty, however, when the panel comes with other components, it attracts duty payment because of categorisation of payable duty.
He suggested to the REAN group to engage the Federal Government appropriately on the issue, since it was a policy issue.
It would be recalled that the Federal Government had informed of its target to have 10,000 mini-grids by which it would generate 3,000mw of electricity to energise underserved off-grid communities across Nigeria by 2020.
Damilola Ogunbiyi, managing director, Rural Electrification Agency (REA), confirmed this development, stating that the agency was securing $350 million from the World Bank for the purpose of rural electrification, out of which $150 million would go into funding the mini-grid projects.
Key mini-grid projects are expected to serve 200,000 households and 50,0000 local enterprises across Niger, Plateau, Kaduna and Rivers states.
Available records from the REA show that 50 percent of Nigeria’s 180 million population are not connected to the grid, and can be energised through mini grid that will involve private sector participation.
Records show businesses spend N40 billion every year to generate unstained electricity, and to reduce that the REA is working with the private sector to provide off-grid power supply strategies for the next five years, starting from 2015.
Analysts believe that proper engagement with the government by the renewable energy experts will improve accessibility of solar power to many about 95 million Nigerians who are off the central grid
