Clean energy firms rue taxes

Some private sector players in the clean energy space have urged government to make the taxation system more receptive for investors.

They claim the current system hampers investments and obscures the country ’s goal of shifting the population into clean energy use by 2030.

This was observed at a Clean Energy Enabling Environment Conference in Lilongwe last Friday where companies and stakeholders, including donors and government, discussed the bottlenecks for policy intervention.

The engagement was organised as part of an initiative called Green Economic Transition Facility (Getf) that provides financing windows for innovative technologies on clean energy.

During the discussions, it was observed that there are tax inconsistencies in some areas such as solar equipment where import duty waiver of solar panels is cancelled out by taxes on other equipment and materials used to install solar power systems, making such alternative energy expensive.

Some clean cooking fuels also have their cooking stoves taxable, making them unaffordable . to many Malawians who opt for unsustainable energy solutions

According to the 2018 Population and Housing Census, only 2 percent of the population is using clean energy as 98 percent still use unsustainable fuels such as firewood and charcoal from natural forests.

Presscane is one of the companies that showcased clean energy solutions, introducing cooking stoves that use ethanol but are yet to be launched on the market.

But the showcased stoves could be pricy to a large section of Malawians if the tax is maintained, hence making the innovation difficult for adoption, according to Presscane chief executive officer Bryson Nkhomaanthu.

“We are discussing with authorities how to remove the tax, because that way it will be easier to scale up the supply and make business sense,” he said.

With most of the clean energy products on the market expensive as the meeting observed, it is also difficult to attain acceptability on the market , making investments in this space highly risky.

Ministry of Energy Principal Secretary Alfonso Chikuni admitted the need to provide more tax-waivers to unlock investment opportunities and proliferate clean energy products. However, during the opening of the conference, he pointed out the usual lack of the trickled-down effects of tax-waivers on the consumers.

“Somet imes, when companies ask for the tax exemptions, and are provided, they do not benefit the consumer and that defeats the whole purpose,” said Chikuni.

Irish Ambassador Seamas O’Grady, said the agenda was to identify key enablers that would unlock the full potential of green energy solutions and to explore strategies for promoting adoption of fuel-efficient cooking technologies.

In an interview after the conference director o f energy Joseph Kalowekamo said upon formal report submission, the ministry will take up the recommendations to continue to lobby with the Ministry of Finance and Economic Affairs for waivers.

UNDP is championing Getf launched last year, with co-financiers that include Germany, Flanders and Irish governments.

Getf provides matching grants of up to $300 000 (K525 million) to firms that are doing innovations that offer affordable and sustainable clean energy solutions for households and industries