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‘Energy sector investors put off by indigenisation policy’

Energy and Power Development minister Elton Mangoma disclosed this at the Zimbabwe Independent Dialogue in Harare yesterday held under the theme: “Is Zimbabwe’s industry revival being stalled by the energy crisis?” The minister was responding to criticism that there seemed to be no movement at all on the roll-out of IPPs to augment Zesa’s strained capacity. A proposal by Essar of India that it would have been on the grid by September was cited as an example.

Although the Essar deal was reportedly now on course, Mangoma said concerns over indigenisation and the general perceived political risk of Zimbabwe stood in the way of several other potential power-generation projects. Zesa last year published a list of potential power projects throughout the country which included thermal, hydro and gas power stations. But the uptake by potential investors, particularly foreign investors had been slow.

“The people prepared to do IPPs are not there… They are finding the economic situation and political situation not acceptable to them. They are saying ‘We want to put in money only to lose 51%. Why should I bother when I can go somewhere else?’” Mangoma said.

However, in an effort to encourage private power generation, the Energy minister said he had directed that anyone who wishes to add to the national grid be expeditiously granted the licence to do so. Previously, potential investors in electricity generation had been frustrated by bureaucratic bungling in the issuing of licences. The one stop-shop policy adopted by the Zimbabwe Investment Authority, encompassed the issuance of power generation licences.

Mangoma lamented that despite the bureaucracy, investment in the power sector also faced formidable challenges in the form of corrupt tendencies by Zesa staff. Describing the corrupt tendencies as shocking, he gave an example of some employees who went to the extent of removing certain pages on tender documents so that the bidders they didn’t want to win would be disqualified.

Turning to the long-stalled Batoka hydroelectrical power project, a joint venture with Zambia, Mangoma said he expected this to finally take off now that the dispute between the two countries over its implementation had been resolved. Zimbabwe had undertaken to pay Zambia US$70 million owing from the time of the Federation when the two countries jointly embarked on the Kariba hydroelectric project.

“We will now identify an independent power producer to do a BOT (Build Own and Transfer) on Batoka. We have not yet agreed on the (full) concession,” Mangoma, who was on his way to Zambia yesterday to firm up on the agreement, disclosed. Meanwhile, government was also exploring other power sources such as thermal and gas.

“We are also looking at thermal and gas. But we need to do a little more exploration on the gas side,” said Mangoma. “We can start generating electricity from gas while we are conducting the exploration, depending on the quantities of the gas.” A delegate from the Industrial Development Corporation expressed concern that if the gas option, particularly the Lupane gas project was delayed, Zimbabwe stood to lose out to Botswana, which was already exploiting the same resource.

Responding to questions on Zesa’s managerial challenges, including its failure to efficiently collect money owed to it by users, the minister pointed out that prepaid metres were now almost certainly on the cards in a bid to deal with an alarmingly high rate of default among Zesa customers. The winning bidder to supply the metres was required to first install them before he could be paid.

Acknowledging the challenges that power shortages presented, Industry minister Welshman Ncube, who was also a guest of honour at the function, said Zimbabwe needed to come up with credible macro economic and investment policies to attract investment, adding that the nation could not move forward without a reliable and affordable power source.

He said with sound policies, Zimbabwe’s power situation would change. However, in implementing existing policies, the unity government was facing challenges in differences of opinion among parties. This was stalling economic progress on many fronts.

He cited the Essar deal, where despite his ministry having given the nod to the Indian company to take over Zisco and its mining rights, the Mines ministry, run by Zanu PF, had delayed implementation of the agreement. Essar were still awaiting the transfer of mineral rights from the old Buchwa Iron Mining Company to the new entity –- New Zimbabwe Minerals.

“Sometimes you feel like ripping your hair off because of exasperation,” he said. Ncube also expressed his frustration over the national debt issue, where his MDC party and MDC-T believed Zimbabwe should apply for the International Monetary Fund’s Highly Indebted Poor Country (HIPC) status, which qualifies a country for debt cancellation, but Zanu PF was opposed to this. As such, the US$7 billion external debt still hung over industrial and economic recovery potential. HIPC provides debt relief and low-interest loans to cancel or reduce external debt repayments to sustainable levels.

Zanu PF argues that Zimbabwe has vast resources and cannot accede to such a “humiliating” status.

Said Ncube: “Some say we are a very rich country. Some say we have so much resources. Others blame the sanctions. At the end of the day we are unable to deal with this (the external debt issue). I doubt we will deal with this issue in the current lifetime of the GNU.”

Responding to worries by delegates over surtax on goods that are not locally manufactured, Ncube said he was against such unjustified protectionist attitude, adding Finance minister Tendai Biti would soon revoke sur-tax.

Sur-tax is an additional tax on something already taxed, such as a higher rate of tax on incomes above a certain level.

Ncube added he would launch the finalised Industrial Development Policy (IDP) and trade policy in the next few weeks. –– Staff Writer.

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