Renewable energy makers criticise duty concessions for big projects

KARACHI: Renewable energy makers on Wednesday rejected what they termed the discrimination from the government shown to small players as duty concessions on imports are privileged only for the plants with 25-megawatt or more generation capacity.      

Harappa Solar (Pvt) Limited (HSPL), in its petition filed to the National Electric Power Regulatory Authority, said this has created discrimination against smaller projects with less than 25MW capacity. The company added that this issue has created an undue burden on smaller projects.

A customs general order (CGO) allows concessionary duties on equipment imported for a power project with generation capacity of 25MW or above.

According to the order, such power projects are also exempted from the condition of using locally-manufactured goods under the Customs Act 1969 and Sales Tax Act, 1990. This means import of all goods and equipment at the concessionary rates.

The Alternate Energy Development Board (AEDB) said it fails to understand the rationale behind fixing 25MW limit for the taxes and duties under the CGO.

“As per AEDB’s knowledge, there is no agency manufacturing solar PV (photovoltaic) plants and equipment locally as per international standards,” the board said in a notice. “Secondly, fixing 25MW slab is discrimination. Either there should be no duties and taxes or in case if local manufacturing is done as per international standards, then CGO should be applicable to every capacity.”

Various estimates said Pakistan can produce more than 2.9 million megawatts of solar power. Unfortunately, so far the country has around 100 megawatts of solar power evacuated to national grid.

The AEDB said 35 projects with a capacity of 1,111.4MW are under development within the board’s framework. Upfront tariffs have been approved for 10 developers and of those three projects of 100MW each have signed a power purchase agreement.

Government is offering incentives to investors for solar power development in the country. Investors have been offered lucrative fiscal and financial incentives that are of key interest for them to come to this market. 

Provincial governments are also facilitating development of solar power projects. Pakistan started to develop solar PV power projects in 2009.

The AEDB said street lighting consumes around 300MW of total electricity of the country. This load will reach to around 500MW in the coming days due to new installations in planning and design stages. All such load can be shifted to solar energy, it added.

The irrigation system in most of the arid agricultural areas is either dependent on rain or water pumps. This load accounts for more than 1,000 MW.