Ministry of Commerce suggests joint venture between Chinese company and Ghani Glass for solar panel production localization.

The Ministry of Commerce (MoC) has suggested a collaboration between Chinese enterprise Sinotec Solar (Pvt) Ltd and the Pakistani company Ghani Glass to boost the production of solar panels within Pakistan. This recommendation emerged in a recent inter-ministerial meeting led by Rashid Mahmood Langrial, the acting Additional Secretary of the Ministry of Industries and Production. The meeting revisited the outcomes of a prior session on February 26, 2024, and discussed several topics including Sinotec's import strategies and the impact of tariffs and taxes on the solar industry.

Langrial highlighted the importance of minimizing tariffs on fully assembled solar panels to avoid consumer price hikes. He also stressed the necessity for Sinotec Solar to outline a comprehensive plan for localizing production over five to seven years to be eligible for duty-free import of raw materials and equipment. Muhammad Ashfaq, representing the MoC, delved into the quota system for imports managed by the Input/Output Co-efficient Organisation (IOCO) of the Federal Board of Revenue (FBR), underscoring equitable treatment across sectors in terms of capacity utilization and post-audit evaluations.

The dialogue also covered the fiscal impact of duty-free imports for 2023-24, with an anticipated revenue loss of Rs20 billion against a total expected revenue of Rs31.9 billion, resulting in a net revenue growth. Additionally, the session examined the tax-exempt status of imported solar cells, with other components remaining taxable, and procedural updates like the reclassification of Sinotec’s plant location and the need for a formal lease agreement. Sinotec Solar outlined a conditional plan for localizing six critical components of solar panel production, committing to local production of solar cells within five years based on achieving specific production milestones. However, concerns were raised about the plan's reliance on market volume and its disregard for export potential.

To address these issues, the MoC proposed that Sinotec Solar form a joint venture with Ghani Glass to expedite the localization process and facilitate technology transfer, urging for an indigenization plan without conditions, backed by a bank guarantee. The meeting wrapped up with plans to establish clear responsibility matrices, conduct a tariff and tax forecast for the coming decade, and for Sinotec to engage with Ghani Glass on developing an exhaustive localization strategy. This proposed partnership aims to advance domestic manufacturing and support sustainable energy initiatives in Pakistan.