Nigeria: VAT and its effect on the uptake of renewable energy products
Concept of VAT and its potential influence on the various renewable energy solutions offered by renewable energy companies
Concept of VAT and its potential influence on the various renewable energy solutions offer
Over the past years, several off-grid power companies have emerged, typically using renewable energy sources that serve the dual purpose of supplementing the national grid shortfall and assisting the country to meet its climate change obligations under the various international agreements.
Today, the bulk of the market for renewable energy companies are in rural areas where several have set up mini-grids or focused the sale of their solar home solutions. Pricing and affordability, therefore, remains a key issue. One of the key sources of air pollution in urban areas is small fossil generators in use by small and mid-size enterprises (SMEs).
The government moved to exempt the sale of renewable energy equipment from the application of value added tax (VAT) in the VAT (Modification) Order 2021. However, the effect of the exemption on the pricing and affordability of the available solutions is still unknown.
Read an October 2022 report [PDF 3.6 MB] prepared by the KPMG member firm in Nigeria that reviews the concept of VAT, the provisions of the VAT (Modification) Order 2021, and its potential influence on the various renewable energy solutions offered by renewable energy companies.
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