Solar home systems in trouble  

The growing use of solar home systems (SHSs) in the country is feared to be hard-hit by the recent move of the National Board of Revenue (NBR) to impose new taxes and VAT on local production as well as on import of solar modules. The move of the NBR is a bolt from the blue for all the parties engaged in manufacturing and importing solar panels -only more so because they were demanding waiver of taxes and reduced rate of VAT for some time, and were hopeful about things coming their way. What in reality has turned out is that the NBR has decided to impose a 5.0 per cent advance income tax (AIT), 5.0 per cent advance trade VAT and 15 per cent VAT on the import of solar panels. Taken together, the total levy comes to around 27 per cent, which many fear would not only make SHSs unaffordable to consumers but also dampen the motivation behind the commendable progress the country has been making in off-grid electricity generation. 

Imposition of the additional taxes, especially advance trade VAT and VAT, has been viewed by concerned quarters as contrary to the government plans to generate 2,000MW of electricity, or 10 per cent of total production, through renewable energy by 2020. With this objective in view, quite a number of solar-based initiatives such as solar irrigation, mini-grids, rooftop-based solar home system and solar power plants are being established in various parts of the country. In order to serve more off-grid population, the NBR should have interacted with all stakeholders to strike a fine balance in import and local production of solar panels and other necessary kits before deciding on levies by way of taxes and VAT.

The country has struck a breakthrough in the use of solar home systems - an important segment of renewable energy, which has been acclaimed as the largest off-grid renewable energy programme in the world. This has been revealed in a recent report of the Paris-based energy think-tank, REN21. According to the report, as of 2017, more than 6.0 million SHSs and kits were in operation worldwide, with 25 million people benefiting from them. Bangladesh, the world's largest market of SHSs, now has more than 5.0 million units installed, benefiting eighteen million or 12 per cent of the population. This certainly is a laudable achievement. Infrastructure Development Company Ltd (IDCOL) Bangladesh, the focal point to run the initiative, started the SHSs programme in early 2003 to meet basic electricity needs of the off-grid rural people as well as supplement government's vision of ensuring access to electricity for all the citizens by 2021.

That the decision is going to harm the ongoing activities involving SHSs in the country looks quite evident. It does not require experts to assess the negative impact. However, since the decision is yet to come into force, it is expected that the NBR would rethink about it, and try to address the situation in consultation with all the stakeholders.