‘LONGi's market share in Pakistan has been the highest among other players’

Ali Majid is a seasoned marketing professional with over a decade of experience in the renewable energy sector. Currently, He is serving as the General Manager of LONGi Solar’s Pakistan Branch, He is responsible for overseeing the company’s operations and driving business growth in the MEA & CA region.

His extensive educational background includes a Ph.D. Candidate in Industrial Management, with a specialization in Marketing/Green Marketing, an MS in Marketing, and a COL-MBA, among other qualifications. He has also been involved in numerous professional certifications and courses related to renewable energy and marketing. Following are the edited excerpts of a recent conversation BR Research had with him:

BR Research: Tell us about yourself. And can you tell us about LONGi ’s global operations and its operations in Pakistan?

Ali Majid: I have been in this field since 2012 where I have worked for various PV panel manufacturers. Before working with LONGi, I was involved with another Chinese solar PV manufacturer. So, it’s been more than 10 years working with the Chinese PV panel manufacturers in Pakistan for business development and promotion.

LONGi is a Chinese company with 7 manufacturing facilities within China. Outside of China, their production facilities are present in Vietnam and Malaysia. The company’s sales operations are present in over 150 countries including the Pakistan Office. Founded in 2000, LONGi Green Energy Technology Co., Ltd. (LONGi) has been a solar wafer manufacturer and supplier with a global market share of 40 percent in wafer supply. In 2015, the company decided to move vertically and move into panel manufacturing. Today, LONGi is fully vertically integrated.

LONGi came to Pakistan in late 2019 and early 2020. That is when LONGi started its globalization endeavor. Before that LONGi was solely working within China. Today, LONGi’s footprint in Pakistan is around 5GW, which means that the company has been able to sell 5GW worth of solar panels to Pakistan.

The Pakistani market has grown significantly in recent times. As a result, 7-8GW of solar panels were imported last year and many Chinese players ventured in. LONGi’s market share in Pakistan has been the highest among other players. In the last quarter, it was 34 percent. Globally, 70 percent of the PV manufacturing market is held by China, followed by the US, and Germany.

China as a supplier of PV panels to Pakistan makes sense because of cost benefits and logistic viability. LONGi was the largest solar panel supplier last year as well as this year so far because of the technological edge, cost-benefit from vertical integration, and existing footprint.

BRR: LONGi has production facilities in other countries besides China. Any plans to set up any in Pakistan?

AM: We have had multiple discussions on the local manufacturing of panels. There is no import duty on solar panels in Pakistan, which is the main factor that discourages the setup of a production facility in the country. Secondly, China is a mass producer with economies of scale we cannot match. What the other countries where LONGi has a facility have done is levy safeguard duties on the imports to encourage local producers. So, why would LONGi invest in a production facility in Pakistan when there is no lucrative incentive? Currently, it makes more sense to import from China than to produce panels in-house. Foreign investment comes in when it is facilitated.

In the recently announced Solar Panel Local Manufacturing and Allied Equipment policy, the PPIB has proposed a 10 percent import duty on solar panel modules, which we believe is not enough to incentivize local production. This is because a feasibility study suggests that the local manufacturer needs a 20 percent import duty to at least break even. Another idea that was discussed was making the public sector projects use made-in-Pakistan PV panels, which could encourage foreign investment from solar manufacturers from China. As of now, there is no barrier to stopping imports, which makes little sense for a foreign investor to set up a plant here.

Another reason why China diversified its production outside of China was the anti-dumping duty by the US on China. As a result, China shifted some of its manufacturing to countries like Malaysia and Vietnam. But why Vietnam and Malaysia? There is another incentive for that. These countries carry out glass manufacturing, and tempered glass is an important raw material for PV panel manufacturing. Whereas, setting up in Pakistan will require importing all raw materials, which again makes little sense.

BRR: What are the reasons behind the recent crash in solar power panel prices? What is the situation globally in terms of demand for solar panels and supply?

AM: Manufacturing of solar panels touched record levels in China, and Pakistan faced a supply glut. This has resulted in a price crash in the domestic market. One of the reasons behind record production from China has been the closure of many markets for the market leader due to the US pressure – leaving a surplus of solar panels and pressure on Yuan. This resulted in a price fall in the global market that has been going on for more than a year now.

On the local front, the country faced financial issues during and post-COVID times when opening an LC became close to impossible for many businesses. But as soon as the situation improved, there was a backlog of LCs as well as new LCs where many people imported solar panels due to the global price decline. This resulted in oversupply in the domestic market and local prices crashed. Solar panels have now been selling at 5 - 10 percent lower than the cost, though recently we have witnessed a spike. From the consumer perspective, this is the right time for investing in solar power as prices are at their lowest.

BRR: There was an uproar about the government contemplating a significant reduction in the rates paid to consumers who generate solar power through net metering. Also, they are proposing a tax on solar panel users. How do you view these recent developments?

AM: There is pressure from the IMF, and the CPPA also proposed a tax on commercial and residential solar installation. However, recently the Power Division clarified that no such summary has been sent to the government regarding the imposition of a fixed tax on solar power and net metering for now, which means that the idea is not completely off the table and could be brought forward again when deemed fit.

Comments

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Ch K A Nye May 20, 2024 07:26pm
There is no pressure from the IMF on the GOP to impose taxes commercial/residential solar installations.
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Chawla.i May 21, 2024 12:01pm
Solar is a solution and we hv to think hard how this industry can b developed in Pakistan
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