ERA Kick against VAT increase on renewable energy

The Executive Director ERA Dr Godwin Uyi Ojo who spoke at the international workshop on Tax Regimes for solar off-grid Electricity in Africa. On Thursday in Abuja, warned that the implementation of an increase in tax will visit hardship on Nigerians.

Ojo specifically argued that an increase in VAT will deny Nigerians access to renewable energy. He argued that the” proposed hike of the value added tax VAT from 5% to 7% in Nigeria , if  implemented should not be extended to solar lighting equipment and clean energy cookstoves. We strongly advocate for tax exemption for all renewable energy products to improve energy access for all”

Participants from   Norway, and  African countries such as Mozambique, Kenya ,Togo Nigeria including civil society groups ,and communities , representatives working in renewable energy, were present to address the challenge faced in various tiers, and on the way forward.

According to him,”to address the challenge of global warming and reduce greenhouse gas emissions in the atmosphere, Government agencies , civil society groups , communities and other stakeholders in the public and Private sectors need to make a commitment toward transition from fossil fuels to renewable energy energy sources. And that in Nigeria about 70 percent of the 200 million people depend solely on fuelwood for energy for heating and cooking . This has led to high rate of deforestation of 3.5 percent representing one of the world’s highest deforestation rate annually”

” Due to over dependence on oil which has made non oil sources unattractive , the Government need to focus on the prevailing tax regime’s on solar and lighting gadgets and energy efficient stoves. As some countries derive national revenue from tax regime’s from import and export of goods and services . In Africa tax burden impose obstacles to the promotion of renewable energy which is hampering the implementation of the sustainable development Goal7 which is promoting clean energy access to all.

Since tax regime’s may help the government in  revenue generation from import tariffs, Ojo said” it is clear that it is contributing to the slow pace of of renewable energy development and access for all, Notably, import tariffs increases tax burden in ways that lead to high transaction costs that are often passed on to customers seeking renewable energy transition.