Viability of clean energy

Seemingly oblivious to the economic condition of the country, the PTI government levied the GST on solar panels

Prime Minister Shehbaz Sharif has announced withdrawal of the 17% GST on solar panels primarily to cut the oil import bill, which has ballooned to $20 billion. He made the announcement at a meeting with businesspeople and industrialists of Karachi on Sunday. The lifting of GST on solar panels will encourage the use of clean energy and thereby cut the oil import bill. While the rupee has been in free fall in relation to the dollar, the crude oil price in the international market too has been on the upswing due mainly to its rising demand because of the disruption in the supply of natural gas from Russia. Countries deficient in energy have been left with no option but to increase the import of oil. This has resulted in a situation that varies from country to country. Pakistan is placed in a precarious situation as its forex reserves too have depleted.

Seemingly oblivious of the perilous economic condition of the country, the previous PTI government levied the GST on solar panels. This was done at a time when power rates were being increased continuously. In the face of the rising electricity prices and prolonged power outages, people found solar energy a viable alternative to electricity. Unfortunately, when both sources of energy became expensive, the option of switching to clean energy was closed. The reversal of the reckless decision is a welcome move.

The PM also announced exempting goods whose import has been banned in cases where the Letter of Credit has been opened. Industrialists asked the PM to ensure proper gas supply to industries without reducing supplies to domestic consumers. Besides pledging to improve gas supply to industries, the PM promised to take other steps for the benefit of both businesses and the common people. He stressed the need for increasing IT exports from the existing $1.5 billion to $15 billion. The scrapping of GST on solar panels indicates that now the subsidies on oil, diesel and electricity might be cut. The government should announce targeted subsidies on power consumption for vulnerable groups.

Published in The Express Tribune, May 24^th, 2022.

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