What plagues the solar industry and what can be done about it?

One thing the citizens of Pakistan may have been particularly frustrated with last week was the sun, which shone intensely wherever one went. The government, perhaps, would have taken it as another reason why solarization would be a highly successful prospect for the country.

It is well-known that Pakistan has a recurring balance of payments crisis and its foreign exchange reserves are critically low — $ 4.01 billion as of June 9, 2023, which is not enough to cover even a month's imports.

As the country's foreign exchange reserves depleted sharply last year, the government identified that energy generation-related expenses, for which Pakistan has to import fuel, were quite high. It, therefore, decided to launch the National Solar Energy Initiative, with Prime Minister Shehbaz Sharif announcing the government would launch solar projects to generate 10,000 megawatts of electricity.

While announcing the budget for fiscal year 2024 on June 9, 2023, Minister for Finance and Revenue Ishaq Dar revealed the decision to remove customs duties on the import of raw material of solar panels, inverters and batteries.

The government also allocated Rs 300 crore to convert 50,000 tube wells to solar energy.

Following the announcement, the solar industry must have collectively breathed a sigh of relief, for it has been plagued by numerous problems in the current fiscal year that will end on June 30.

The problems began back when the Pakistan Tehreek-e-Insaf (PTI) government decided to impose a 17 percent general sales tax (GST) on the import of all solar equipment at the start of 2022.