Fred Itua, Abuja
Experts have called on the Federal Government to reduce the tax burden on renewable energy products by scaling down the Value Added Tax (VAT) to 2 percent.
They have also called on the National Assembly to make laws for more relaxed fiscal policies for renewable energy products in Nigeria.
The Environmental Rights Action/ Friends of the Earth, Nigeria (ERA/FoEN) says the reduction will go a long way in growing that sector.
Executive Director of the international organisation, Godwin Ojo, who spoke on behalf of others, made the call while addressing a press conference at the weekend in Abuja.
He noted that 60 per cent to 70 percent of Nigeria’s almost 200 million population do not have access to electricity. He added that in diversifying energy sources that is sustainable, renewable energy is the best option.
He stressed that tax regimes might help African governments to rake in revenue from import tariffs, but added that it was also contributing to the slow pace of renewable energy development and access for all.
“The diverse sources of tax is worrisome with 5 per cent Stamp Duty, 5 per cent on solar panels, 25 per cent on batteries and inverters and other sundry taxes which raises the tax burden to about 30 per cent on products,” he stated.
“We strongly propose that lowering taxes on renewable energy products will go a long in the promotion of energy access for all. Therefore, the proposed hike on VAT from 5 percent to 7.5 percent in Nigeria, if at all it will be implemented, should not be extended to solar lighting equipment and clean cook-stoves.
“We strongly advocate for reduction of VAT to 2 percent on renewable energy products; five years tax moratorium for new renewable energy products to improve energy access for all; five years tax holiday for pioneers status in indigenous renewable energy businesses in Nigeria.”
The environmental rights organisation also stressed the need to urgently decentralise energy and supply to allow governments, civil society groups, communities and the private sector to participate in the energy sector supply chain.