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Political risk puts off investors

THE energy sector in Zimbabwe has failed to attract significant foreign players since 2017 due to an unfavourable investment climate but the sector’s regulator sees the position changing, given foreign investor sentiment.

Despite injecting more than US$3 billion in southern Africa in the energy sector, foreign investors have shunned Zimbabwe due to high political risk.

Information from the Zimbabwe Regulatory Authority (Zera) points to the fact that all independent power projects (IPPs) that have been licenced since last year are locally owed, although business enquiries show a high appetite for the sector.

Zera acting CE Eddington Mazambani told businessdigest last week that, among other issues, government needed to make it easier to repatriate dividends and facilitate the payment of foreign loans.

The issue of repatriation has made the country unattractive to foreign investors over the years as a number of companies have been failing to remit dividends offshore.

Mazambani said there is need for the existence of a market over the investment period and availability of a credible off-taker while tariffs are cost reflective.

“The entire independent power IPP projects licenced in the past year to date are owned by locals and there are no foreigners involved in the ownership. The projects are at various stages of development; some have reached bankability, financial closure and some have commenced construction.”

The appetite of foreign investors is very high given the enquiries that have been received from various potential investors. The appetite is likely to grow given assurances that have been offered by government in the various fiscal statements,” he said.

Government has been working to reduce the country’s power import bill by embarking on new electricity generation projects intended to make Zimbabwe a net energy exporter. —Staff Writer.

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