ECOWAS Country introduces VAT exemption on PV panels

Benin has introduced VAT exemption on imports of PV panels. The exemption will be applied to the import of materials, equipment and installation accessories for the deployment of PV and solar thermal systems. The new measure is aimed at increasing access to electricity through more off-grid projects.

The Beninese government has included in the 2020 finance law a measure to exempt the imports of solar panels from the payment of the value added tax (VAT).

According to the Off-Grid Clean Energy Facility (OCEF), a public entity aiming to increase access to electricity for unserved populations in rural and peri-urban areas of Benin by reducing barriers to investment in the offgrid electric power sector, the VAT exemption will apply to materials, equipment and installation accessories for the production of PV and solar thermal energy. The new fiscal incentive, however, will not apply to inverters.

“These provisions apply to solar panels and other ancillary equipment essential for installation such as lamps, electric wires and especially batteries, which account for about 30% of the cost of solar electrification projects,” the OCEF said. “It is essential that the government follow up on these measures to ensure their effective implementation on the ground,” it added.

Benin is currently supporting large-scale PV through a tender for the construction of four solar power plants with a combined capacity of 50 MW.

All of these projects and another 25 MW project recently tendered by the French Development Agency (AFD), are part of the government’s plan to add around 150 MW of new electricity capacity, which would more than double the approximately 140 MW of generation currently online in Benin, only enough to cover about 20% of total power demand in the west African nation. The remaining 80% is provided by imports from neighbouring countries such as Cote d’Ivoire, Ghana, and Nigeria.