KARACHI: The government’s decision to impose 17 per cent sales tax on solar panels, inverters and related equipment will jeopardise the very essence of the National Renewable Energy Policy which aims to acquire a 30 per cent share of renewables in energy mix by 2030.

Pakistan Solar Association chairman Rana Ghulam Abbas said the increase in prices of solar energy systems/equipment is taken as a threat to the progress of the renewable energy sector and all the stakeholders foresee a drastic negative impact on the future of renewable in the country.

He said at a time when the world is setting targets for a zero-carbon economy, supporting the trade of green products and imposing penalties on the high carbon sector, the government’s decision does not prevail as a favourable idea for its own sustainability.

The country needs to increase exports and earn foreign exchange in order to save the national economy from the current crisis. However, solar energy is becoming costly due to increased taxes, thus pushing up production cost to compete on the international market, he said.

Mr Abbas said solar equipment is an effective import substitution mechanism as it is imported one time and electricity is generated locally for the life of the equipment. He said the progressive economies of the world are developing policies to incentivise and favour the solar industry. On the contrary, the new taxes would only make Pakistan lag behind in the sector but as an economy on a holistic level, he feared.

Published in Dawn, January 4th, 2022