Rescind move to tax solar, cookstove products, Treasury told

The reintroduction of VAT on renewable energy appliances will erode the gains made so far in the adoption of clean cooking, manufacturers have said.

The government, in the 2020-21 budget, reintroduced tax on solar and cookstove products. The sector previously enjoyed exemption but customers will now part with 14 per cent value-added tax (VAT).

Burn Manufacturing, an improved cookstoves maker based in Ruiru, Kiambu county, has raised concerns that the VAT will significantly water down the gains made in the promotion of clean cooking.

The company fabricates cookstoves that cut fuel consumption by 50 per cent and emissions by 65 per cent. Its product brands include Jikokoa and Kuniokoa. It has markets across Sub-Saharan Africa.

Firm CEO Peter Scott on Tuesday said the VAT will lead to an increase in prices, thus making it difficult for most Kenyans to acquire clean energy cooking products.

“The decision by the government to scrap the clauses that offered an exemption to solar and clean energy cookstoves will have far-reaching effects. The numerous gains we've made so far in pushing for adoption of clean cooking solutions will be eroded,” he said.

He noted that the majority of Kenyans who use solar-powered products and improved cookstoves are low-income earners in rural areas.

“Imposition of tax on the products will make them expensive and therefore reduce accessibility. It is actually contrary to the Sustainable Development Goal (SDG) 7, which aims at ensuring access to affordable, sustainable, reliable and modern energy for all,” Scott said.

The firm’s Jikokoa cookstove that has been retailing at Sh3,900 will now go for Sh4,600, an increase of Sh700 due to the tax. Scott said the new price will lock out many potential users.

"The benefits of using clean energy cookstoves include a reduction in emission of black carbon and thus conserving the environment. All this will go down the drain,” he said.

He urged the government to reconsider the decision and instead come up with progressive policies that will support manufacturers in the country.

“We call upon the government to create sensible policies that will create a favourable environment for investment. Introducing VAT to our products does not make economic sense. Other countries like Zambia, Rwanda and Malawi have exempted tax on the products and investors might settle there,” Scott said.

He, however, assured that the firm will continue its operations in Kenya, despite the high taxation, and continue investing in clean cooking solutions. They plan to introduce new products, including hybrid cookstoves and electric stoves. The company has employed 400 workers directly and 1,800 indirectly.

“We are determined to make Kenya the hub of clean cooking solutions. We believe the government will realise the benefits of our products to the conservation of our environment and put in place proper and business-friendly policies,” Scott said.

“We will also redesign our products so we can adjust the prices to make them affordable to the majority of Kenyans. By January next year, the price of Jikokoa will be reduced to Sh2,300,” he said.

 

Edited by F'Orieny