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Published On: Fri, Sep 27th, 2019

New VAT regime: ERA/FoEN wants renewable energy products exempted

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By Musa Adamu

As the Federal Government considers the idea of increasing Value Added Tax (VAT) rates from 5% to 7.5%, stakeholders in the Renewable Energy (RE) sector have called for the exemption of the sector from the new regime.
They said it was important to do so in order to encourage the ongoing growth in the development of the nascent sector in the country.
They also called on the relevant authorities to toe the path of countries such as Kenya and Ghana in bringing up deliberate policies aimed at fully developing the sector.
Speaking during the International Workshop on Tax Regimes for Solar Off- grid Electricity in Abuja yesterday, the Executive Director, Environmental Rights Action/ Friends of the Earth (ERA/FoEN) Dr Godwin Ojo, noted that the event was aimed at promoting RE access for all.
He said this can only be achieved through the elimination of the prevailing high tariffs.
The two-day event drew participants from Mozambique, Kenya, Togo and Nigeria.
He said although tax regimes helped governments to rake in revenues from import tariffs, it was clear that the act was slowing down the pace of RE development and access to all.
He said: “ Notably, import tariffs increase tax burden in ways that leads to high transaction costs that are often passed on to consumers seeking RE transition.”
He called on African countries to take steps to avoid being made a dumping ground by encouraging state and non-state actors to get involved in the production and supply of RE technologies and products.
“Therefore, there is urgent need to decentralized energy production and supply to allow governments, civil society organisations, communities and the private sector to participate in the energy sector supply chain.”
In his key note address, President of the Renewable Energy Association of Nigeria (REAN), Segun Adaju, called on the Nigerian government to borrow a leaf from Kenya and Ghana on thier handling of RE sector.
Providing some statistics to buttresse his assertion, Adaju, declared that nigeria’s tax regmes were hostile to the development of RE sector.
He however, said the operators in the sector should take advantage of enhnaced funding windows in the country, noting that there were now more funding facilities in the country.
He called on Nigerians to be interested in the sector, disagreeing with the notion that RE was too expensive to access.

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