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• • • • 2.7 2.7.1 • • • • • 2.7.2 Support research and development and carry out feasibility studies and demonstration projects for alternative technologies and fuels for urban transport such as electricity, fuel cells and hydrogen; Upscale the current demonstration projects concerning the use of biofuels in rural transport and farm machineries; Carry out studies and demonstration projects for the use of higher blend biofuels for freight transport; Based on the technical studies and demonstration projects, develop a long-tern program for sustainable transportation system in Lao PDR. Financial mechanisms Participation of the private sector The private sector is permitted to invest in the following projects: Small power production (SPPs) projects with non-firm contract (the project is paid only for energy production); Grid connected renewable energy project with non-firm contract (for own use and sale to EDL for surplus production); Grid connected renewable energy project with firm contract (project is paid for capacity provision and energy production); Off-grid projects; Activities in bio-energy, biogas or bio-fuel production such as fuel crops plantation, construction of processing plant and bio-fuel production and blending. Financial incentives Financial related barriers to renewable energy development in Lao PDR are high upfront investment requirement and lack of available find for renewable energy projects. The Government will provide financial incentives and financing assistance to renewable energy projects and investors. Financial Incentives Investments in renewable energy projects in Lao PDR, whether on biofuels production, grid- connected or isolated systems, off-grid projects, and individual systems, are entitled to investment incentives under the Investment Law of Lao PDR, update in 2009. The financial incentives include the following: • Import duty free on production machinery, equipment and raw materials; • Import duty free on chemical materials necessary for biofuels production within 7 years; • Profit tax is divided in to 3 categories: 20%, 15% and 10%. Profit tax exemption is possible for a certain period depending on activities, investment areas and size investment; 24PDF Image | Renewable Energy Development Strategy in Lao PDR
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