The government has once again postponed approving a new policy for solar panel manufacturing due to ongoing uncertainty between promoting solar energy and safeguarding imported fuel-based power generation. This delay has disrupted investment plans for Sinotec Solar Corporation, a leading US solar panel manufacturer planning to relocate its factory from Thailand to establish an advanced automated plant for high-end solar panel production aimed at exports. According to Express Tribune, the Economic Coordination Committee (ECC) recently deferred approval of the 2024 solar panel manufacturing policy, marking the fourth delay.
The ECC’s decision contradicts directives to approve the policy aimed at reducing import dependence. Local manufacturing of solar panels could significantly cut the country’s import bill, potentially saving up to $900 million annually once domestic production exceeds 50% of total panel value.
The proposed policy by the Ministry of Industry includes exemptions from duties and taxes on raw materials and machinery used in local manufacturing, alongside higher import duties on finished solar panels to discourage reliance on imports.
It outlines a 10-year strategy with annual targets for investment, production capacity, exports, and localization. Investors are required to provide bank guarantees equivalent to tariff and tax exemptions. The policy aims for companies to progressively increase production and export percentages, with specific targets for localizing solar panel components.
The Ministry of Energy has proposed a 10% customs duty on PV modules over the next decade but hasn’t agreed to the initial two-year 20% localization requirement, advocating instead for duty-free panel imports during this period. Incentives are tied to meeting localization and export goals, with provisions for withdrawing incentives if targets are missed by more than 20%.
Despite setting a goal to add 10,000 megawatts of solar power by 2031, uncertainties persist regarding government approval of the new policy.
