In a bid to encourage solar power in Pakistan, the government has decided to promote the import of solar panels by reducing duties. Not only will this result in cheaper rates, but it will provide the local industry with competition as a newcomer in the market. At the same time, a high sales tax on raw materials may just be enough to push local manufacturers into the ground. Many corporations from the private sector have voiced their concerns, and the government must address them immediately.

Recent directives dictate that a 17 percent sales tax will be imposed on the raw materials and components of solar panels. This directly impacts the local industry by driving up the cost of production, resulting in higher prices which will discourage the population from transitioning to solar power to meet their energy needs. This is made worse by the fact that the import duty on fully manufactured solar panels has been suspended, meaning that external sources can sell their solar panels in the market at much cheaper rates. Their ability to price their product competitively will eventually drive out local competitors even though Pakistan has reserves of raw material needed for producing solar wafers in the first place. One would assume that the abundance of materials will ensure that prices remain relatively cheap and stable, but that is not the case. Keeping in mind this scenario, complaints are more than justified.

Solar power is still a relatively new market in Pakistan and accordingly, the industry needs carefully planned strategies that will not only encourage local production but provide competition to drive up quality. The government’s policies must reflect a healthy balance between imports and localisation so that no one entity monopolises the market and exploits consumers. Our overarching objective is to promote the use of green energy and to achieve this, the market must be regulated carefully to maximise the chances of success.