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Why govt needs to review taxes, tariffs on renewable energy components

Campaign Director for Power For All in Nigeria, Ify Malo, has urged the Federal Government to address the burdensome taxes and tariffs for renewable energy components in the country.

Malo, who stated this in chat with Sweetcrude also said that the government should provide strong opportunities for power generation through renewable energy.

According to her, “The national electricity grid infrastructure is in trouble. This is evident in the frequent (sometimes daily) grid collapses and even moreso by the utter lack of expansion in our electrification rates in decades.

“The mandate given to the Generation Companies, GENCOs and Distribution Companies, DISCOs, through Nigeria’s privatization process are not being met as the Transmission Company of Nigeria, TCN, continues to struggle with its inability to transmit electricity due to inadequate and obsolete infrastructure.”

She also said that at the core of the challenges is the rising debt portfolio across the Nigerian Electricity Supply value chain and the fact that over 60 percent of the country remains un-electrified.

She further explained “The latest Global Off-Grid Solar Market Report shows that the Nigerian decentralized solar market grew 73 percent in the first six months of 2016, and is still growing at an accelerated rate. However, the solar market is still at a very nascent stage, with the high cost of financing a significant barrier to scale.”

 

“First by eliminating subsidies for diesels and kerosene, you create a better and more holistic playing field for private enterprise in the market. The removal of these subsidies also enables families and business make better and more economically informed choices such as switching to the cleaner and more sustainable options in Renewable energy.

“For instance, Nigeria reportedly spent billions of dollars in kerosene subsidies in 2015 alone, such financial investments can be used to catalyze the decentralized renewable energy sector and rapidly increase energy access program.”

She added that, “Without addressing this issue it would be almost impossible for the consumer market for renewable energy product to grow. The only way to build a demand driven market for solar products in Nigeria is to ensure that it is affordable, accessible and financeable.

“This brings us to the issue of financing for this sector. There is also the need to figure out how to unlock consumer financing for this sector. Governments have to do more to support enterprises and organizations that can enable consumer financing.”

Ify noted that, the newly launched Bank of Industry, BOI, fund for solar is a positive leap for the sector. The Fund which was recently launched for micro, small and medium enterprises (MSMEs) will address the challenges experienced by MSMEs in Nigeria who according the leadership of the bank, spent an “estimated N3.5trillion to generate alternative power.”

“Certainly, this fund is coming at a very pivotal time. As we are seeing the rising cost of diesel and kerosene across the board, and the unavailability of regular supply of these products, the emergence of this bond will definitely provide the much catalyst to grow the solar industry and ensure that value chain for the solar market from developers to consumers thrives,” she added.

Commenting on reaching the economic market scale, she urges that we have to enable installers and developers sell renewable energy services and products in a way that allow consumers and end-users purchase and pay in installments.

“This would require favorable lending practices by commercial banks and micro-credit organizations as well as innovative payment and payback systems enabled by technology platforms that will enable and speed-up collection systems from end-users.

“Nigeria is certainly ripe for an energy revolution. The old business model for the electricity supply industry is fast fading. We cannot continue to expect a heavily burdened, massively indebted and obsolete distribution, generation and transmission network to provide the energy needs of 180million people. The BOI fund definitely provides a strong platform for this energy revolution to occur.”

 


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