Chinese companies to help promote solar energy in Pakistan

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ISLAMABAD: Chinese companies manufacturing solar panels will have to play a crucial role in generating alternative renewable energy (ARE) in Pakistan.

At present, according to market research, more than 90% of solar panels and other related equipment are imported from China.

Chinese companies are executing and managing solar power projects in Pakistan, including 300MW solar power projects which are operational under the umbrella of the China-Pakistan Economic Corridor (CPEC)

In a recent interview, former Prime Minister Shahid Khaqan Abbasi said, “Solar power is very important for Pakistan’s needs today” and added, “I expect China, which has world’s most experienced in solar energy, come to Pakistan and help the country get more sustainable energy”. He also invited more Chinese companies to come to Pakistan and establish solar panel manufacturing factories in the country.

Pakistan is targeting an alternative renewable energy (ARE) generation mix on the grid of 20% by 2025 and 30% by 2030, adding that the policy targets the development of ARE projects primarily on competitive bedding, unsolicited mode limited to G2G and new technologies.

Pakistan has over 225 million people. About 88% of the population has access to electricity while 12% are still not electrified. Annual per capita electricity consumption in Pakistan is about 550 kWh compared to the world average of 3,081 kWh per capita.

The National Electric Power Regulatory Authority (NEPRA) has approved the Indicative Generation Capacity Expansion Plan (IGCEP) 2021 with demand supply plans through 2030. As part of the ‘IGCEP, the current installed capacity of 34,776 MW will become 61,112 MW by the end of 2030. Besides the committed pipeline projects, the IGCEP requires an addition of 10,062 MW of ARE capacity by 2030.

To encourage renewable energy generation in the country, the government on Friday announced sales tax exemptions on solar panel imports and distribution.

Presenting the budget proposals for the next fiscal year to the National Assembly on Friday, Pakistani Finance Minister Miftah Ismail said the energy sector is of critical importance to the people as well as industries and commerce in the country, adding that currently fuel prices are skyrocketing, which makes thermal power expensive. “For these sectors and people, we have provided an additional subsidy of Rs 214 billion,” the minister noted.

The Minister of Finance has proposed a tax exemption on the import and local supply of solar panels. He said subsidized loans from banks will be given to people who consume less than 200 units of electricity to buy solar panels.

The previous government of Prime Minister Imran Khan imposed a general sales tax of 17%. The imposition of taxes on solar panels has received criticism from different quarters.

Earlier in May, Prime Minister Shehbaz Sharif announced the reversal of the decision to tax solar panels, which will be implemented in FY23.

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