Is There Any Value in the Central Bank of Sudan and the Prime Minister’s Announcements on Solar Energy?

Dr Eng. Jaafar Ahmed Khalifa

On 10 September, the Central Bank of Sudan issued a circular on financing solar energy for domestic use. On its face, the circular appears intended to facilitate access to solar energy systems for household use, as its vague wording suggests. It does so through the following measures, quoted verbatim:
Facilitating the approval of acceptable guarantees, including salary deductions, in accordance with the applicable banking regulations.
Extending the financing repayment period to a maximum of three years.
Exempting applications for financing solar energy systems for domestic use from all banking fees.
The fourth point calls for expediting banking procedures.
Good heavens! One might think the person who drafted the circular and the person who signed it were unaware of the meaning and practical value of its contents—or that they live in a society other than our own, where the overwhelming majority of people struggle to make ends meet.
To ensure that my comments are not as vague and ineffectual as the bank’s circular, let me offer the following criticisms:
The first point introduces nothing new, provided it does not specify guarantees beyond those already recognised under the bank’s existing circulars, including salary guarantees, and provided it qualifies them with the phrase ‘in accordance with the applicable banking regulations’. I then ask: what proportion of the population consists of salaried employees? And would a quarter of the employees, even if they devoted their entire monthly salary—not merely a portion of it—to repayment, be able to cover the cost of a small system consisting of four panels and its associated components within three years? It is as though the Central Bank of Sudan does not know the salaries of teachers, doctors, soldiers, judges and other state employees.
As for the second point, why three years as the maximum? Why not five years? Or is there some other restriction preventing an extension to five years that the authorities are reluctant to mention?
The third point addresses the exemption from banking fees. These are administrative and technical charges calculated as a percentage of the transaction value. They are very small, amounting to no more than, and perhaps not even reaching, 2%. Consequently, waiving them does not meaningfully facilitate access to finance.
As for the talk of protecting the environment by switching to clean energy, it betrays either profound ignorance of the distinction between clean and non-clean energy and its relationship to environmental protection, or ignorance of the fact that the majority of citizens do not use electricity generators that pollute the environment when the national grid is down.
Talk of contributing to environmental protection would be realistic if the circular included financing incentives for the sectors that consume the most diesel, with a view to providing local electricity generation. These include the agricultural and industrial sectors, including mining, as well as the service sector, encompassing hospitals, bakeries, educational institutions and places of worship.
Does the Central Bank of Sudan realise that a three-year financing period means almost doubling the cost of a solar energy system—perhaps increasing it slightly beyond 100%—under its prevailing policies, which it directs banks to observe while simultaneously instructing them to facilitate financing? What a contradiction!
Why did the circular not address the annual profit margin banks charge under the central bank’s prevailing directives? This is why citizens with better salaries are reluctant to try to acquire solar energy systems through the banking system.
During the past few weeks, we have also seen the Prime Minister announce decisions that, on the face of it, aim to facilitate the acquisition of household energy systems by citizens returning to the country, carrying solar panels and batteries with them as they pass through customs clearance.
These are decisions with no practical value on the ground—so much so that they warrant a statement from the Prime Minister himself. Why are they of no value? Since imported components of solar energy systems intended for commercial purposes are exempt from customs duties, it follows, as a matter of obvious logic, that the decision should also cover equipment brought in by citizens for personal use. This is especially true given that the President has previously stated that personal-use belongings are exempt from customs duties.
A cry of protest—may it not disappear into the vastness of the Sahara, like its predecessors.
To the Government of Mr Kamil Idris:
Establish a dedicated green finance facility with genuinely supportive policies, independent of the Central Bank of Sudan’s prevailing policies.
Set the annual profit margin at 7%.
Compensate the facility for its anticipated losses arising from the low annual profit margin and the continuing deterioration of the exchange rate. Such compensation could come from funds previously used to subsidise electricity, grants and loans expected from regional and global funds specialising in this field, and corporate social responsibility allocations from major companies and other sources.
Understand that a comprehensive transition to renewable energy will support our national economy.
Finally, a carefully considered transition to renewable energy requires a comprehensive plan adopted by the entire government, not fragmented and piecemeal policies introduced here and there—one time by the Ministry of Finance in relation to customs duties, another time by the Central Bank of Sudan, and yet another time by the Prime Minister, without any real practical value.
Develop a comprehensive energy transition plan with clear objectives first, then enact the laws and policies needed to achieve them. A plan of this kind would assign a role to every ministry, rather than leaving responsibility solely to the Ministry of Finance or the Central Bank of Sudan.
Renewable Energy Consultant

Shortlink: https://sudanhorizon.com/?p=18069