This study has been commissioned to analyse the costs and benefits of removal of Value Added Tax (VAT) and import duties on household energy products of considerable importance to the majority of the population of Mozambique – solar photovoltaic (PV) lanterns, solar home systems and improved cookstoves to reduce firewood and/or charcoal requirements.
The report discusses the justification for support to the household energy sector, the development partner support to improving household energy access, requested tax exemptions, the approach to the analysis, analysis of model results, recommendations, and the advocacy and marketing strategy.
The quantified analysis, using the model, provides a strong case for the Government of Mozambique to commit to eliminating VAT and import duties on household energy products for a 10 year period. The factors quantified in the model show that the benefits significantly exceed the costs. There is an important caveat to the recommendation, which is that the tariff reductions should only be made for products which meet specified standards.
This report has been written by Economic Consulting Associates and produced by Evidence on Demand with the assistance of the UK Department for International Development (DFID) contracted through the Climate, Environment, Infrastructure and Livelihoods Professional Evidence and Applied Knowledge Services (CEIL PEAKS) programme, jointly managed by HTSPE Limited and IMC Worldwide Limited, now part of DAI.