Daily Insight: How Close are we to diversifying to Clean Energy?

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Recently, the Renewable Energy Association of Nigeria (REAN) objected a recent import duty of c.5%-10% on the importation of solar panels by the Nigerian Customs Service (NCS); this is excluding the huge demurrage fees paid due to long delay at the ports. Nigeria scaled up 24 spots in the 2018 World Bank Ease of Doing Business Index to the 145th position but getting electricity remains a challenge, as the country ranked 172nd(of 190) in term of access to electricity. Over-reliance on thermal and hydro-powered plants, which are susceptible to poor gas supply and incessant breakdowns, account for part of the problem.

Across the globe, diversification to cleaner energy sources is gaining popularity. In fact, Kenya recently halved tariffs on one of its state-owned solar plants to reduce reliance on diesel-powered plants. For Nigeria, the recent import tariff hike by the NCS, not only nullifies the essence of the signing the Paris Climate Change Accord but makes the already inaccessible solar energy more expensive for individuals and businesses. This will further drive the demand for fossil fuel and mini-electricity
generators, and as such dampen recent effort to improve the ease of doing business in Nigeria.

We are of the view that this tariff should be reversed with other fiscal incentives introduced to ease the importation, and most importantly kickstart local production, of solar panels and other sources of renewable energy in the country.

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