Senegal exempts renewable energy equipment from VAT to accelerate rural electrification

SENEGAL – The Government of Senegal has decided to exempt equipment used for the production of renewable energies such as solar, wind and biogas from paying VAT (value added tax).

A statement from Senegal’s Ministry of Oil and Energy explained that the decision was aimed at accelerating the electrification of rural areas in the country.

The decision by the Senegalese government was well received by operators in the renewable energy sector in the country who have for a time been lobbying for reduced taxes to make renewable energy affordable.

According to the Ministry of Oil and Energy, the VAT exemption concerns the solar energy sector and included all equipment including those used in solar powered irrigation systems.

Wind energy production components exempted from the VAT by the Senegalese authorities include the tower, the blade, the rotor, the nacelle and the hub which is essential in the construction of wind farms.

The exemption from import VAT also applies to biogas production equipment such as the biogas stove, biogas flow analyser, prefabricated bio-digester, biogas pump, desulphurisation unit, water trap, biogas generator and substrate mixing unit.

The Senegalese Ministry of Oil and Energy further released a list of 22 electricity and biogas production facilities that are exempt from VAT (value added tax).

According to the Senegalese Ministry of Petroleum and Energy, the new measures will reduce the acquisition costs of renewable energy production equipment by 18%.

The ministry further noted that the government’s decision is part of a much broader strategy aimed at achieving universal access to electricity in this West African country by 2025.

To implement its policy, the Senegalese government is relying on decentralized solutions such as mini-solar grids, solar kits and large grid-connected power plants.

One example is the 158.7 MW Taïba Ndiaye wind farm built under a public-private partnership (PPP) by Lekela, a joint venture between the British investment fund Actis and Mainstream Renewable Power.

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