LAHORE: In a recent development, the Lahore Chamber of Commerce and Industry’s Standing Committee on Port and Shipping, along with the Liaison Customs Intelligence Convener Rehan Siddique, has raised concerns about the obstacles faced in the execution of the government’s solar panel import policy. The policy, which aims to promote solar energy adoption by offering zero taxes on solar panel imports, has encountered significant roadblocks from customs authorities and other agencies.
Despite the government’s commendable efforts to address the energy crisis by incentivizing the import of solar panels with zero-rated taxes, importers have taken the initiative to arrange their own funds due to the ongoing dollar crisis in the country. However, they have been met with unexpected challenges and delays in the clearance of solar panel shipments, leaving the motives behind these obstructions unclear.
Siddique Rehan, the LCCI standing committe convener, revealed that customs officials and other agencies have been subjecting solar panel importers to unwarranted inquiries and prolonged clearance processes. This has not only frustrated importers but has also hindered the progress of solarization efforts in the country.
The backdrop of this issue lies in the timeline of solar equipment import policies. SRO 575(1) of 2006 initially permitted duty-free imports of solar equipment, including solar panels, solar batteries, solar charge controllers, and solar inverters, from 2006 until June 30, 2014. However, in the 2014-15 budget, SRO 575 was repealed, and its provisions were incorporated into the fifth and sixth schedules of the Finance Act 2014, resulting in a 32% tax on solar panels, 50 percent on solar batteries, and 35 percent on inverters. This abrupt shift adversely impacted the solar industry.
Furthermore, solar panels and batteries were added to the CGO under the Finance Act 2014 without a thorough assessment of the local assemblers’ quantitative and qualitative production capabilities. Consequently, the decision to impose duties and taxes on imported solar panels and batteries not only burdened solar companies with additional costs but also led to substantial demurrage and detention charges as they navigated various government departments seeking remedies.
The stark contrast between the yearly import of over 500 MW of solar panels and the meager local production capacity of only 10 MW per year underscores the growing demand for solar energy solutions in Pakistan. However, the imposition of taxes and the bureaucratic hurdles have hindered the growth of the solar market, discouraging potential investors and impeding the country’s transition toward clean and sustainable energy sources.*
Siddique, the Liaison Customs Intelligence Convener of the Lahore Chamber of Commerce and Industry’s Standing Committee on Port and Shipping, has urged the government to reconsider its stance on taxing solar equipment imports. He emphasizes the importance of promoting renewable energy sources, such as solar power, to address Pakistan’s energy crisis and facilitate economic growth. The resolution of these issues is crucial to harnessing the full potential of solar energy and ensuring a sustainable future for the country.
