Shell Advises Nigeria to Heavily Tax Petrol, Diesel Generators

All On, which is a seeded company of Shell, has advised Nigeria to initiate and implement a graduated and weighty tax system on the production, assemblage and importation of power generating sets that use diesel and petrol. This, it stated would buoy growth of off-grid renewable energy power sources in the country. All On also asked the country to set a timeline of three years to kick out generators in the country and transit from using such fossil fuel generating sets to clean energy sources such as solar.

In a new report titled: ‘Strategic Fiscal Incentives to Unlock the Off-Grid Clean Energy Sector in Nigeria: Opportunities and Recommendations,’ the firm argued that raising duties on petrol and diesel generators would enable the growth of clean energy sources mostly in off-grid communities. All On, however, stated that industries located in off-grid communities could be exempted from the proposed regulation provided they are able to satisfy certain conditions which could include taking into account of the location of the industry in comparison to available grid power or the viability of renewable energy in the particular context. The report, it explained was to stimulate the growth of the clean off-grid energy sector by designing strategic incentives to promote the sector. It noted that it identified existing regulations in the sector as well as made recommendations on how they could become significantly improved on to guarantee the growth of the sector. It added: “To discourage the importation, production and assembly of diesel/petrol generators and encourage the use of clean energy and energy efficient off-grid equipment, we recommend that the import duty levied on wholly petrol and diesel generators be increased by an additional 2.5 per cent every two years from the start date of the regulation imposing the additional levy.” It further said: “We propose that the regulation provides for a transition period of three years to facilitate the switch from diesel/petrol generators to clean energy sources for off-grid electricity generation. “The importation of generators may also be discouraged by the introduction of additional levies in the form of Import Adjustment Tax (IAT). Currently, IAT ranging from 15 per cent to 35 per cent is applicable to varying categories of generating sets. However, we propose that the IAT rate be increased to 50 per cent.” “Industries using this equipment can however be exempted from these duties and taxes where certain conditions are met. The conditions can take account of the location of the industry in comparison to available grid power/gas or the viability of renewable energy in the particular context,” it added while stating that the proposed increase in import duties on generators will not apply to generate sets powered by clean energy sources such as gas, solar, wind and hybrid generating sets. All On also explained that it wanted Nigeria to introduce Value Added Tax (VAT) exemptions on qualified goods and services deployed for generating off-grid energy.


Source: Brandspurng