eBusiness Weekly
Business Writer
Government’s move to exempt taxes and levies on fuel imported for approved energy generating projects will boost the sector through increased investment, although it still needs other support measures.
In the 2018 National Budget, Finance and Economic Planning Minister Patrick Chinamasa said Government was in support of energy generation projects and proposed the exemption of diesel imported for use in approve power generation projects from carbon tax, NOCZIM debt redemption and strategic fuel reserves as it moves to improve the sector and attract investment.
Zimbabwe Energy Council (ZEC) executive director Panganai Sithole said this was a step in the right direction and a key incentive for attracting new investment in the sector.
However, Sithole said power projects are capital intensive and therefore require support measures that help allay investor concerns over the country’s risk profile. He cited restoration of relations with multi-lateral lenders to reduce country risk as well as improve financial relations.
“The minister is in the right direction and trying to attract investors into the sector. We could save a lot if we improve power generation and cut on imports,” said Sithole in a telephone interview.
“It is important to note power projects are capital intensive and need huge investments to pull through. The same big investors who pour their money into Mozambique for instance, are the ones we also want.
“But they need to be sure of their investments, which is why we should ensure the re-engagement process is successful. As a country we need to pay our creditors, that is how we can attract huge investments, these need support from big lenders like the IMF (International Monetary Fund)” he said.
In his 2018 National Budget presentation, Minister Chinamasa emphasized the need for pushing for the re-engagement process with international financial institutions as part of efforts towards boosting the economy.
“Our quest towards the ‘New Economic Order’ will also require complementary support from development partners, access to external borrowings, as well as resource inflows into the economy.
“Hence, pursuing the re-engagement process with international financial institutions in particular the World Bank and African Development Bank, and European Investment bank, will be enhanced in order to unlock external new financing required by productive sectors.
“The loss of long standing correspondent banking relationships, or ‘de-risking’ by leading global banks was also beginning to pose significant risks to the country’s efforts to finance international trade and access foreign lines of credit,” said Minister Chinamasa.
In 2018, the country projects electricity generation to register a stronger growth 14,6 percent. This year, electricity generation and distribution improved and anticipated to reach 7 661 giga watts per hour by end of the year, representing an 8,1 percent growth.
The growth in electricity generation comes on the back of increased water allocation towards power generation by the Zambezi River Authority in line with Kariba Dam water
