IFC, GIZ for tax-free solar lanterns

Two global lenders have requested the government to offer tax-free regime for import of solar-powered lanterns to help lighten the country's vast rural areas still out of national power grid, officials said.
The International Finance Corporation (IFC) and the German Agency for International Cooperation (GIZ) made the appeal as they are helping Bangladesh under joint-venture 'Lightning Asia' programme to reach rural people off-grid electricity, they added.
Presently, the total tax incidence (TTI) on Solar Pico PV systems is 24 per cent which makes the product unaffordable to the poorest segment of people who still remained powerless.
In a recent letter to the chairman of the National Board of Revenue (NBR) the two global agencies said apart from rapid expansion of grid connectivity, the solar home system (SHS) programme run by Infrastructure Development Company Limited (IDCOL) and other organisations are complementing efforts to reach electricity to all.
However, they said, a significant segment of the population still remained off the grid as grid electricity could not reach many parts of the country till now.
"It's important that newer technologies, especially the ones based on renewable sources, be taken up to help the government achieve its electricity-for-all goal by 2021," said one official.
The IFC, the private-sector financing arm of the World Bank, and the GIZ, a German Government initiative, have been promoting quality-tested solar lanterns in Bangladesh with a view to replicating success of Lighting Africa, Lighting Asia-India under Lighting Global Programme.
"The government has also rightly recognised the importance of promoting such lanterns. Hence, the TTI on Solar Pico PV system has been reduced from 39 per cent to 31 per cent and then finally to 24 per cent in the latest tax revisions," the official noted.
"This can only be a step towards the positive direction as it is in complete alignment with Government strategy of adding 10 per cent of energy mix from renewable sources and universal sustainable development goal of ensuring affordable and clean energy," he added.
The officials said given the potential of these products to confer a significant level of positive private and social returns by directly replacing harmful kerosene-based lighting and adding extra benefit of mobile phone-charging facility, it is important that these products be made widely available and affordable.
"Hence, a tax-free regime, zero TTI, at least for the initial years, for the market of these products to develop is highly recommended," they added.
The IDCOL is financing installation of more than 65,000 SHSs every month, with average year-to-year installation growth of 58 per cent.
So far, nearly 3.7 million SHSs have been installed in the off-grid rural areas. Some 13 million beneficiaries are getting solar electricity, which is around 9.0 per cent of the total population of the country. IDCOL has set a target to finance 6.0 million SHSs by 2017, with an estimated generation capacity of 220 megawatts of electricity.
Presently, some 405 megawatts of electricity is being generated from renewable sources. Of the total, 150 megawatts come from SHSs, 11 from rooftop solar system, 230 megawatts generated by hydropower and the rest from solar-powered irrigation pump system.
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