Alternative energy in Syria: Investment dreams crushed by harsh reality
Enab Baladi – Zeinab Masri
In his inauguration speech to the People’s Assembly of Syria after securing a fourth term in May’s presidential elections, the head of the Syrian regime Bashar al-Assad talked about alternative energy investments, and soon government officials and pro-government media outlets started promoting this alternative form of energy as the “savior” and the “bearer” of Syrian economy’s future.
The frequent rise in fuel prices, its absence and high shipping costs to regime-controlled areas, constant electricity outages, and increased number of power rationing hours have pushed the regime to search for alternative sources of energy to re-operate the industrial sector.
The aforementioned problems have severely affected the country’s economy, industrial investment, and citizens’ living conditions.
Renewable energy represents an optimal option for Syrian citizens under the country’s electricity crisis and the regime’s inability to solve the problem. However, the costs of clean energy are unaffordable to many low-income citizens who are going through a deepening economic and living crisis in regime areas.
New law on renewable energy loans
During the inauguration speech, al-Assad said that the next phase of investments would focus on alternative energy investments, adding that solving the power problem remains a priority because it is not only vital to daily life but also to various investments.
Al-Assad promised to promote investment in renewable energy and to support it through policies or legislations with the aim to launch power generation projects by the private and public sectors or by a public-private partnership.
Member of Syria’s People’s Assembly, Mohammed Ghazwan al-Masri, told the local pro-government newspaper al-Watan on 19 July that a new law is being considered by the Assembly that will soon be passed on alternative energy.
Through this law, interest-free loans will be granted to anyone considering relying on clean energy resources.
According to al-Masri, if industrial plants start depending on alternative energy sources, such as solar energy, electric power consumption supplied by the regime’s government to plants and factories will be reduced, and the electricity situation will become better for civilian residential areas.
Government facilities and incentives
Al-Watan newspaper issued a report on 3 August entitled “Alternative Energy Holds the Future of the Economy.” The report talked about facilities provided by the regime government for alternative energy-based projects.
According to the newspaper, the benefits and incentives granted to such projects are not limited to customs advantages exempting imports, including machines, equipment, production lines, and non-tourist service transportation modes, from all customs and financial duties and non-tariff additions.
The newspaper added that projects based on renewable energy would receive tax incentives, including a 50 percent tax exemption for ten years. These incentives increase as the number of workers employed in such projects increases.
The incentives could amount to an additional five-year tax deduction of 5 percent for every 100 Syrian workers participating in social security programs and are employed in clean energy-based projects.
Alternative energy is a term for renewable energy displacing fossil fuels, including petroleum and natural gas, introducing less environmentally harmful and more durable natural resources, such as solar, wind, and water energy. Clean power relies primarily on renewable natural resources and is affordable as its cost is limited to tools and equipment.
Economist Khaled Turkawi told Enab Baladi that investment in renewable energy requires billions of US dollars, indicating that the regime’s government is unqualified to enter this sector.
Turkawi added that countries neighboring Syria like Jordan and Turkey have large-scale alternative energy-based projects and are paying millions of US dollars in these investments.
Turkawi explained that alternative or renewable energy, whether wind or solar, is expensive, particularly in regard to its infrastructure, but the power production it provides becomes cheap in the long run.
He added that the wind energy generated by wind turbines is free of charge, but a wind turbine purchase and installation costs up to 10 million US dollars.
Turkawi pointed out to Enab Baladi that three years ago, a single wind turbine was installed in the western countryside of Homs governorate. Today, work is underway to install two additional wind turbines, meaning that the installation of wind energy infrastructure takes place every two or more years in the private sector in Syria.
According to Turkawi, the most convenient regions for private sector solar energy investments include the geographical area of Palmyra and the Syrian Desert to the city’s eastern countryside and Raqqa. Nonetheless, this region is a conflict zone to this day, pushing investors away for fear of attacks on projects and financial losses.
Another fit region for alternative energy investments based on wind energy is the Latakia mountains and the western Homs countryside facing coastal areas. This region is relatively secure, but the infrastructure needed to generate wind energy would be costly.
The third region suitable for hydropower operated projects includes the Tigris and Euphrates rivers, but the two rivers are outside the regime’s control; therefore, it can not use them. The Orontes river is still under regime control; however, its flow is weak and cannot be utilized for hydropower generation.
Prices beyond the financial ability of average citizens
Syrian banks provide loans for alternative energy-based projects for companies and investment projects, but not for citizens. Recently, news has spread that a law is under study to grant citizens loans for renewable energy projects.
The Commercial Bank of Syria grants financing loans for alternative energy generation projects, financing 50 percent of the project cost after excluding the land value and with a credit limit of up to 2 billion Syrian pounds and a ten-year repayment period including a grace period of one year, in addition to certain securities.
Enab Baladi surveyed several websites of companies working in installing solar energy generating systems in regime areas and found out that the cost of a solar power system for household use amounts between 3 and 14 million Syrian pounds.
Mohammed, an owner of a company for installing solar energy systems, told Enab Baladi that the type of the system to be installed must be identified first for there are different system models for domestic, industrial, or agricultural uses, and each model requires different tools.
He added that the prices of the tools depend on the energy system type, while the prices of systems vary according to their size. Solar panels’ prices are fixed for all systems, while the price of the inverter, a device responsible for transforming solar energy generated through solar panels into solar electricity, varies depending on its type and operational capacity.
The regime’s government promotes renewable energy projects’ lending facilities from Syrian banks operating in its areas of control, but these banks impose conditions that make access to such loans difficult for citizens with low monthly incomes.
On 4 August, the Assistant Director-General of the Popular Credit Bank (PCB), Wajih Bitar, made an interview with the local Sham FM radio station, in which he talked about conditions of medium, small, and micro-projects’ production loans to be granted by the PCB.
Bitar said that the PCB will grant production loans to any licensed economic project starting from 1 September.
Production loans’ repayment period is between 1 and 10 years, while interest rates range from 8.5 to 10 percent, depending on the loan term and purpose of the project.
Production loans require bank guarantees under one of these two types, a personal guarantee that includes guarantees of low-income or owners of production projects and in-kind guarantees of real estate, money, or securities (fund investments).
As for alternative energy loans (solar heaters or photovoltaic cells), the PCB pays the devices’ costs to the manufacturing company, while the borrower repays the loan in installments to the bank.
Banks in regime-controlled areas require citizens applying for loans to have high monthly income, previous loans’ repayment proof, and the presence of guarantors, making loans hard to obtain, particularly within financial difficulties of low wages and high exchange rates in Syria.
According to the Salary Explorer website, salary and wage rates in Syria for 2021 range from 37,600 Syrian pounds (12 USD) to 663,000 Syrian pounds (200 USD), and the average monthly salary is about 150,000 Syrian pounds (nearly 46 USD).
Citizens throughout Syria are suffering from difficult economic and living conditions due to several factors, most notably the Syrian pound’s depreciation against foreign currencies and the declining purchasing power due to inflation and price increase.
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