MoC proposes SinoTech JV Ghani Glass for Solar Panel Localization
The Ministry of Commerce (MoC) has proposed a joint venture (JV) between Chinese firm Sinotec Solar (Pvt) Ltd and local company Ghani Glass to accelerate solar panel production in Pakistan.
This suggestion was made during a recent inter-ministerial meeting chaired by Rashid Mahmood Langrial, Additional Secretary Incharge of the Ministry of Industries and Production.
The meeting, which reviewed progress on decisions from a previous session held on February 26, 2024, addressed various issues including the importation plans of Sinotec and the imposition of tariffs and taxes on the solar industry.
Langrial advocated for the avoidance of high duties on finished solar panels to prevent price increases for consumers.
He also emphasized the need for Sinotec Solar to present a detailed five to seven-year indigenization plan to qualify for zero-rated duties on imports of raw materials and machinery.
Muhammad Ashfaq from the MoC provided insights into the import quota system managed by the Input/Output Co-efficient Organisation (IOCO) of the Federal Board of Revenue (FBR), highlighting the equal treatment of sectors regarding capacity utilization and post-audit assessments.
An estimated Rs20 billion revenue forgone was discussed in relation to zero-rated imports for the fiscal year 2023-24, against a projected total revenue collection of Rs31.9 billion, indicating a net revenue increase.
The meeting also touched upon the zero-rated sales tax status for imported solar cells, while other parts remain taxable.
Updates on administrative procedures, such as the reclassification of Sinotec’s plant site and the necessity for a signed tenant agreement, were also discussed.
Sinotec Solar’s representative presented a conditional localization plan involving six key items for solar panel production, stating the company’s commitment to localize solar cell production within five years, contingent on reaching certain manufacturing capacities.
However, this plan was met with skepticism due to its market volume conditions and lack of consideration for export potentials.
As a resolution, the MoC recommended Sinotec Solar to explore a JV with Ghani Glass for faster localization and technology transfer, emphasizing the importance of an unconditional indigenization plan supported by a bank guarantee.
The meeting concluded with decisions to finalize responsibility matrices, prepare a tariff and tax analysis for the next decade, and for Sinotec to consult with Ghani Glass to devise a comprehensive indigenization plan.
This collaboration is expected to enhance local manufacturing capabilities and promote sustainable energy solutions in Pakistan.
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