…Warns against solar panel ban
By Adewale Sanyaolu
The Centre for the Promotion of Private Enterprise (CPPE) has raised concerns over Nigeria’s critical energy deficit and noted that the country’s per capita electricity consumption stands at approximately 160kWh, being one of the lowest globally and clearly below the sub-Saharan average of 350kWh.
CPPE’s Director General and Chief Executive Officer, Dr Muda Yusuf, also expressed deep concern over recent remarks attributed to the Minister of Science and Technology, Uche Nnaji, regarding the federal government’s plan to ban solar panel imports in a bid to encourage local production.
The centre cautioned that imposing such a ban, despite Nigeria’s glaringly inadequate domestic production capacity, would only exacerbate the nation’s energy crisis, further limiting access to alternative power sources in a country already struggling with electricity supply.
It added that the adoption of solar energy solutions is one of the most impactful government initiatives to tackle this problem and has gained remarkable traction.
“It is a complete negation of the government policy to deepen and promote the adoption of renewable energy solutions by households, small businesses, rural communities, government institutions, and other corporate organizations.
This adoption of solar solutions has gained impressive momentum in the last two years, especially in light of the soaring energy costs in the economy.”
Yusuf listed some of the consequences of the ban to include worsening the problem of energy access, as it would make the cost of solar energy solutions prohibitive, putting it beyond the reach of the average Nigerian.
“The welfare cost of a ban on the importation of solar panels would be incredibly high as a result of the escalation in the cost of acquiring solar solutions.
It is bad enough that the current cost of acquiring solar energy solutions is quite exorbitant. What is desirable at this time is to seek ways to drive affordability rather than escalate costs.”
On the way forward, Yusuf said the CPPE shares the minister’s vision of domestic production of solar panels, which is good for self-reliance and the conservation of foreign exchange.
However, he warned that the transition process should be painstaking, diligent, and gradual.
“A hasty decision to ban the importation of solar panels would be very disruptive and counterproductive. It is important to ensure adequate local capacity to fill the supply-demand gap.
The contemplation of an import ban is a major trade policy decision that demands rigorous, robust, and painstaking empirical studies to determine the domestic demand for solar solutions, the domestic capacity to meet those demands, and the implications for the wider economy.
An empirical study should also be undertaken to determine the availability and adequacy of critical inputs for the production of solar panels. Current local value addition is very low, and this would create competitiveness and cost issues.
The minister’s announcement of a planned importation ban is already generating concerns and anxiety among the renewable energy investing community, the business community, households, and multilateral organizations.
It has significantly elevated the policy and political risk of investing in renewable energy solutions in Nigeria. This should be avoided because of the adverse impact on investor confidence. Urgent clarification of the government’s position is needed to restore that confidence.”
CPPE said banning the importation of solar panels is a fundamental trade policy matter that is not within the remit of the science and technology ministry.
According to him, the conception, formulation, and implementation framework for such a policy should normally be driven by the coordinating minister of the economy, in collaboration with the industry, trade, and investment minister, as well as the minister of national planning and budget.
He added that there should also be robust stakeholder consultations for an inclusive policy process, saying this would allow for a comprehensive analysis of the wider economic and social implications of such a fundamental policy change.
“Meanwhile, the CPPE believes that Nigeria is not ripe for a ban on the importation of solar panels, given the acute energy deficit in the economy and the glaring domestic capacity limitations for solar panel production.
The CPPE recommends that the government should instead support investors in solar panel production with robust fiscal and monetary incentives—tax incentives, tariff concessions on intermediate products, and concessionary long-term financing at a single-digit interest rate.
CPPE urges the government to cut the import duty on batteries, inverters, and wind turbines to five percent, as this would significantly improve energy access, energy security, and productivity in the economy. It would also reduce reliance on the national grid for power supply. The current cost of batteries and inverters is very prohibitive.
Some of the subsidies given in other climes to promote investment in renewable energy solutions include investment tax credits, production tax credits, financial grants, power purchase agreements, concessionary financing, and support from multilateral institutions.
It is also important to clarify that Executive Order 5, which the minister alluded to, is a procurement policy that directs MDAs to give preference to Nigerian service providers in their procurement process for goods and services.
It is clearly different from a trade policy measure, which has wider economic implications and requires a more rigorous study before policy pronouncements are made.”