Fiscal Incentives for Wind Energy Projects

Fiscal Incentives for Wind Energy Projects

Demand for energy has increased by tremendous proportions in the last few decades in Pakistan and is expected to increase further in the coming years. Pakistan's current sources of energy are oil, natural gas, hydro and nuclear power, but the government is now looking to diversify to other low-cost energy resources, with wind energy as one central option.

The Government of Pakistan provides fiscal incentives for setting up wind Independent Power Plants (IPPs), such as Wind Risk (risk of variability of wind speed), guaranteed Electricity Purchase, grid provision ensured by the purchaser, protection against political risk, an attractive tariff (Cost plus 17% ROE), indexed to inflation & exchange rate variation (Rupee/Dollar), Euro/Dollar Parity allowed, the availability of carbon credits, no import duties on equipment, exemption on Income Tax, Withholding Tax and Sales Tax, repatriation of equity along with dividends freely allowed, permission to issue corporate registered bonds, Direct Foreign Investment (DFI), Financing/Lending for Commercial Wind Power Projects, Export Credit, Capacity Building/Technical Assistance and collaboration in Wind Turbine manufacturing.

Companies such as Vestia and FMO have already moved into this sector. The Netherlands Embassy is keen to help Dutch companies explore which opportunities Pakistan has to offer in wind energy.