Key Points of Policy & Regulations of Solar Power in Pakistan
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ISLAMABAD: The Economic Coordination Committee of the Cabinet (ECC) once again delayed the approval of the Solar Panel & Allied Equipment Manufacturing Policy.
The Solar Panel & Allied Equipment Manufacturing Policy 2023 was created to localize solar panel manufacturing in Pakistan. The policy aimed to stop the outflow of substantial investment in terms of equipment import. As per the policy, the localized manufacturing of solar panels and its allied equipment provide consumers with affordable and quality solar systems. Although the policy opened doors to job opportunities and local industry boosts, the ECC still delayed its summary approval.
On Monday, August 8, 2023, official sources confirmed to Pakistan-renowned news network “The News” that The draft policy proposed 5000 MW of power generation until the fiscal year 2027-28, saving $1.022 billion in fuel imports through import substitution. According to the draft policy, the solar system will provide power for Rs 4-6 per unit, compared to the current tariff of Rs 31 per unit without taxes. When taxes are factored in, the price ranges from Rs 40 to 50 per unit, depending on usage/slabs.
Also Read: Pakistan Aims to Manufacture Solar Panels Locally
The Former Prime Minister of Pakistan had constituted a high-powered committee to evaluate and analyze the policy. The Solar Panel & Allied Equipment Manufacturing Policy had its first official review on March 6 2023, and its approval was postponed with a suggestion to repurpose the policy in a holistic manner consulting all stakeholders.
The policy was again considered in the 47th meeting of the Tariff Policy Board held on April 19, 2023. The CEO of the Engineering Development Board (EDB) proposed protecting local industry from imported solar panels, parts, and allied equipment by imposing a year-by-year Customs Duty/Regulatory Duty on finished products, reducing duties on imported inputs used in the manufacturing of solar panels, parts, and allied equipment, and exempting plant, machinery, and equipment from duties on import. The Federal Board of Revenue (FBR) sought a list of the parts and equipment on which duty reductions were proposed to assess their impact.
Subsequently, the FBR agreed to the plan to encourage local solar panel manufacturing. It was decided that no protection would be provided for imported finished solar panels, inverters, and batteries because it may undermine the consumer advantage from the existing structure/regime, increasing the electricity cost. It was agreed that RD and ACD (Additional Customs Duty) could be decreased to zero and placed in the 5th Schedule of the Customs Act 1969, subject to the FBR's verification/confirmation of those specified items.
Considering all the considerations, the Ministry of Industries sent an overview to the ECC on updated/revised Solar Panel and Allied Equipment Policy 2023 for confirmation on June 7, 2023, which was considered in the meeting on June 14, 2023, for the second time. The Ministry of Industries and Production sent a summary dated July 5, 2023, for approval, which was again postponed by the ECC in its meeting on July 20, 2023, for the third time in a row. Another ECC meeting in the last week of July postponed the equalization of sales tax for importers and local manufacturers of solar panels and related equipment until the next budget for 2024-25.
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ISLAMABAD: The Economic Coordination Committee of the Cabinet (ECC) once again delayed the approval of the Solar Panel & Allied Equipment Manufacturing Policy.