Kenyan based Solar panel maker has threatened to close shop if the government will not waive value Added Tax (VAT) on raw materials.
The firm, Ubbink East Africa, said while it commends the Thursday tax exemption on finished solar products, it termed as un intended effect on VAt ammendments to continue charging manufactures more on raw materials.
The changes it said are still impactuing on its initial expenses, making access to the affordable power a toll order for populations in rural Kenya-the firm said it will no longer engage in passing extra costs to consumers but resort to closure.
Last year’s 16 percent VAT slap on the products pushed it to increase its solar panel prices by a similar margin, noting that the effect was a temporary dip in its sales volumes in two subsequent months as customers feared purchasing the costly products.
“We are going to wrap up our business, its that simple. if the government would like to save manufacturers they should consider further amends before reading of budget in June,” said Ubbink East Africa, Managing director, Haijo kuper.
The Sh 250 million investment factory is a joint venture of Ubbink B.V – a wholly owned subsidiary of Centrotec Sustainable AG and Chloride Exide (Kenya), acting as its local partner.
it started operations in Kenya’s Naivasha sub county in 2011 having reported Sh 280 million in turnover end of last year and is targeting to hit Sh 350 million this year.
the company has two production lines with a capacity of eight megawatts per year. last year it produced a total of 75,000 solar panels with an annual growth rate of 50 percent per annum.
kuper said over 90 percent of rural households lack access to grid power- a factor he said plays a huge potential to hold back the economy.
The tax exemptions it said would rob the country of valuable investments in the manufacturing subsector- hinting that other solar manufacturers may soon follow their suite to fold operations.