The government has once again delayed approving a new policy for solar panel manufacturing due to ongoing uncertainty over whether to promote solar energy or protect imported fuel-based power generation.
This delay has adversely affected the investment plans of Sinotec Solar Corporation, a leading US manufacturer of solar panels, reported Express Tribune. The company plans to relocate its factory from Thailand and set up an automatic plant for high-end solar panel manufacturing for export purposes.
Last week, the Economic Coordination Committee (ECC) of the Cabinet deferred the approval of the solar panel manufacturing policy for 2024. It bears mentioning that this was the fourth postponement.
ECC’s delay contradicts authorities’ instructions to approve the policy to reduce reliance on imports. Local solar panel manufacturing could significantly reduce the country’s import bill, potentially saving up to $900 million annually once localization surpasses 50 percent of the total panel value.
The proposed policy by the Ministry of Industry includes exemptions from duties and taxes on input materials and machinery used in local manufacturing and increased import duties on finished solar panels to discourage dependency on imports.
The policy proposes a 10-year plan with annual targets for investment, production capacity, exports, and localization. It requires investors to provide bank guarantees equivalent to tariff and tax exemptions. The policy aims for companies to progressively increase production and export percentages over the years, with targets for localization of solar panel parts as well.
The Ministry of Energy has proposed a 10 percent customs duty on PV modules over the next decade and has not agreed to 20 percent localization in the first two years, advocating for duty-free imports of panels for two years. The incentives are contingent on meeting localization and export targets, with provisions for withdrawal and recovery of incentives if targets are not met by more than 20 percent.
Despite setting a target of adding 10,000 megawatts of solar power by 2031, the government’s approval of the new policy remains uncertain.
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