NBR’s contradictory tax policies undercut solar expansion potentials

The National Board of Revenue’s (NBR) contradictory policies over tax breaks targeting solar equipment dent rising hopes for a major expansion in the renewable energy during the BNP government’s five-year tenure.

NBR has approved zero tariffs and other taxes on some solar plant installation equipment till June 2031, but limits the benefits to June 2028 for some key equipment, allowing only long-term costly projects from big companies to enjoy the benefits.

Experts raised the concerns at a recent policy conclave organised by the Bonik Barta.

In Bangladesh, small-scale and residential developers form the backbone of solar ecosystem accounting for 63% of total renewable power production, and leaving them out would crimp the government’s countrywide expansion dreams.

On 8 June, the NBR issued a statutory order that exempts solar panels, inverters, and batteries from duties and taxes until June 2031 but extends similar benefits for other key equipment -- including mounting structures, controllers, DC cables, and battery energy storage system components -- only until June 2028.

Therefore, small scale solar projects like rooftop setups, farm irrigation and small businesses have only two years from now to import all the necessary equipment, reducing the appeal among investors and small developers.

Furthermore, the policy complications would delay plant installation permits, which would invariably inflate project budget and shrink the timespan available for completing all the necessary imports.

According to the government’s Sustainable and Renewable Energy Development Authority (SREDA), a vast expanse of roofs at the tops of industrial sites, commercial buildings, hospitals, educational institutions and residential buildings remain largely vacant, making them ideal for hosting solar panels.

These rooftop panels could help generate 5,000 megawatts of electricity every day, effectively diminishing the need for a huge amount of energy import subsidies, and saving Tk4,000-Tk5,000 crores in taxpayers’ money.

The BNP government has set a target of producing 10,000 megawatts of renewable energy per day. With effective support, rooftop solar panels alone could generate the desired energy.