Senegal promotes rural electrification through VAT exemption

 

Senegal’s Ministry of Petroleum and Energies announced the exemption of value added tax (VAT) on equipment destined to producing renewable energy. The list of 22 electricity production equipment comprises photovoltaic solar panels, solar thermal collectors or panels, solar inverters, solar batteries, solar water heater kits, charge regulators, solar lamp kits, solar streetlamps and solar pumping kits, among others. Biogas equipment is also included in the list of VAT-exempted appliances.

The measure was long-awaited by renewable energy operators in Senegal. According to the Ministry, the measure will incur a 18% reduction in purchase costs of renewable energy equipment. An underlying goal is to increase rural electrification, which currently reaches 38%, against 88% in urbanized communities. The country aims to achieve universal access to power by 2025.

The country has shown great commitment to reaching its national power goals through a strong push in the solar and wind spaces. Lekela’s Taiba Ndiaye 158MW windfarm was inaugurated just last year, the largest in West Africa, and several major solar projects have been connected to the grid since 2014. Off-grid solutions such as individual solar kits and mini wind turbines are also gradually coming online, and this new measure is a decisive step towards connecting rural communities to stable and sustainable energy solutions.

In the context of COVID-19, the country has not halted its ambitious development plan in the energy sector. Its numerous incentives to encourage private investment into electricity generation have allowed capacity to double in six years, with two thirds of power being produced by independent power producers.

COVID-19 has hindered but not halted Senegal’s energy ambitions, including in the petroleum sector, where two major projects are set to start producing in 2023, Sangomar and Grand Tortue Ahmeyim. The latter is a pillar of the country’s gas-to-power strategy aiming to lower cost of access while providing stability of the supply.

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