The proposal by the federal government to impose a General Sales Tax (GST) on the import of solar panels is raising concerns among experts about its potential to hinder the growth of renewable energy in Pakistan. Despite this, the unwavering commitment of consumers and businesses to adopt cleaner energy solutions to improve environmental conditions and reduce the country’s carbon footprint continues to drive progress.
This conceren was shown during a webinar titled “Taxing the Sun: Will Solar Still Shine in Pakistan?”, organized by Energy Update and Pakistan Solar Association (PSA) in Karachi. The experts from various sectors voiced their perspectives on the implications of this tax proposal. The event brought together clean energy experts, industrialists, climate activists, and renewable energy traders to discuss the impact of the proposed GST on the solar industry.
PSA Chairman Waqas Moosa emphasized the critical role of solar power in reducing reliance on polluting fossil fuels, especially as the decade from 2020 to 2030 is globally recognized as crucial for clean energy transitions. Despite the potential new costs due to GST, Moosa predicted that Pakistani consumers would continue to embrace solar energy.
However, Moosa also warned that Pakistan’s local solar panel manufacturing industry is not yet capable of meeting the high demand with sufficient quality and quantity. He stressed the importance of a national campaign to encourage industrial adoption of solar solutions, which would help industries reduce emissions and meet international sustainability standards.
The taxation on imported solar panels was heavily criticized during the webinar, with participants describing it as a significant obstacle to Pakistan”s climate action efforts.
Muhammad Zakar Ali, CEO of Inverex Solar Energy, pointed out that while the tax might deter some people, but the majority of electricity consumers in Pakistan recognize the long-term benefits of solar energy and will likely continue their transition away from grid dependence, regardless of tax implications.
Ali also highlighted the need for a grace period of 18 to 24 months before local manufacturing can scale up to meet demands without external support. He expressed optimism about potential investments from Chinese partners to establish local manufacturing facilities, which could also spur the development of related industries.
Dr Khalid Waleed of the Sustainable Development Policy Institute noted the increasing number of rooftop solar installations as a promising trend that could position Pakistan to earn carbon credits in the global climate finance market.
The webinar concluded with a call for both federal and provincial governments to quicken their pace in supporting solar initiatives, particularly the installation of solar systems on public buildings, to decrease reliance on traditional energy sources and foster a more sustainable future.