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Renewable Energy: ERA tasks FG on VAT reduction to 2%

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The Environmental Rights Action (ERA) and Friends of the Earth Nigeria has bemoaned the Federal Government’s proposed Value Added Tax, thus demands the reduction of tax to 2 percent for all Renewable Energy (RE) products.

Available statistics indicates that about 60 percent to 70 Percent of Nigeria’s 200 million population do not have access to electricity. In diversifying energy sources that is sustainable, Renewable Energy (RE) becomes the best option.

The Executive Director, ERA/FoEN, Mr. Godwin Uyi made this known in Abuja at a press briefing on Friday said, “the diverse sources of tax is worrisome with 5 percent stamp duty, 5 percent on solar panels, 25 percent on batteries and inverters and other sundry taxes which raises the tax burden to about 30 percent on products”.

According to Uyi, the Tax burdens particularly in Africa, imposes obstacles to the promotion of renewable energy as It contributes negatively to the implementation of the Sustainable Goal 7 for the promotion of clean energy access to all.

“We strongly propose that lowering taxes on renewable energy products will go a long way in the promotion of energy access for all”. He said.

“Therefore, the proposed hike on the Value Added Tax (VAT) from 5 percent to 7.5 percent in Nigeria, if at all implemented should not be extended to solar lighting equipment and clean energy cookstoves”. He added.

Meanwhile, Mr. Uyi while applauding the Federal Government initiative for the production of Solar Panels through the National Agency for Science and Engineering Infrastructure (NASENI), implored them to increase their capacity building for efficiency.

Similarly, He urged the Federal Government to encourage state and non-state actors to get involved in the production and supply of renewable energy technologies and products, and the policy makers particularly the National Assembly to consider VAT reduction on renewable energy products including a halt to the proposed VAT increase.

However, he demanded that the Federal Government should “reduce VAT to 2 percent, give 5 years moratorium for new renewable energy products to improve energy access for all, give 5 years Tax holiday for pioneers status on indigenous renewable energy businesses in Nigeria and also give start-up grants for indigenous renewable energy businesses”.

Furthermore, Mr. Uyi noted that ” 70% of Nigeria’s population depend solely on fuelwood for energy which has led to the high rate of deforestation of 4.5 percent, (about 500,000 hectares) representing one of the world’s highest deforestation rate annually”, thus recommended that in order to address the challenge of Global warming and greenhouse gas emissions released into the atmosphere, all stakeholders should make a commitment towards transition from fossil fuels to renewable energy sources with a specific target and should be time bound.


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