Fast-track ZPC privatisation: ZEC

HARARE - Government should commercialise the Zimbabwe Power Company (ZPC) and subsequently list it on the Zimbabwe Stock Exchange as a way of attracting foreign investors into the power industry, Zimbabwe Energy Council (Zec) says.

Zimbabwe’s state-owned sole power utility, Zesa Holdings, is struggling to raise $125 million needed to repair outdated power station generators, while $8 billion is required to restore optimum power generation levels.

Despite lining up a series of mega power projects up to 2022 — when the electricity situation is anticipated to have stabilised — lack of investment and fresh capital continue to hamper progress in the sector.

Among these projects are the hydro-power station projects, a methane gas project in Lupane and solar projects in the Zvishavane areas.

“Energy is the single largest driver of competitiveness and economic growth in Zimbabwe and we have to seriously consider investing in energy development for economic growth to be achieved and sustained,” said Zec in its contribution to the 2013 National Budget.

The council said while potentially viable, the multi-billion dollar projects the country intended to embark on required external investors’ participation.

“The basic infrastructure is there and the human capacity to lead this initiative is present. The regulatory framework to support and regulate the industry is up and running with the coming of Zimbabwe Energy Regulatory Authority (Zera).

“The corporate governance structure is present.”

Zec added that the power company enjoyed a competitive advantage in that its energy mix provided investors with a wide cross section of investment portfolios, including though not limited to hydro, coal, methane and solar.

The energy council also urged Finance minister Tendai Biti to unveil a comprehensive and robust support for Zesa to help the struggling parastatal provide uninterrupted electricity supply.

“Zesa has requested $72,5 million and we believe this is a sustainable and fair figure that needs government support,” said Zec.

“These funds need to be availed quickly rather than towards the end of the year to make economic sense.
“They need to be fully supported by both the government direct fiscus provisions and favourable fiscal policies.”

Zec also said Treasury should consider a five-year extension of the waver of duty on imported electricity generator spares and materials.

Among other things proposed by Zec include the elimination of the cumbersome and bureaucratic rebating system on reinstatement of waiver of Vat on spares and materials, and capacity building in terms of technical and human capital expertise and hardware and software systems to enable Zimbabwe Electricity Transmission and Distribution Company to efficiently and effectively collect payments.

“Mini and small hydro projects are part of the solutions to our rural electrification programmes that have been proven to be economic, practical and implementable,” said Zec.

“The beauty of these mini hydro projects is that they are community owned. The communities in these areas have embraced the mind-set that developmental projects have to be market-driven and oriented.
 
“Instead of putting up distribution and transmission infrastructure over long distances to connect the rural areas, mini and small hydro power plants can come in handy.”

Zec also called on Biti to consider incentives to support the initiative and possibly allocate capital for communities to establish their own power projects. The funds could be in form of a grants and loans.

“Organisations that contribute to the development of mini hydro projects should be offered some incentives in form of tax rebates.

Equipment for the development of mini hydro power stations should be duty free and possibly incentivised by removing VAT.”

Zec said government will save a minimum of $200 000 a day and $72 million annually from fuel imports by re-introducing bio fuels and ethanol blends.

“This money is enough to cover what Zesa has requested in the 2013 Budget. This money will also be enough to retrofit over 50 000 electric geysers to solar geysers.

“Hence there is input need to regularise the five percent mandatory blending. We call the Hon minister to seriously consider this suggestion,” said Zec.

The energy council also called for the swift establishment of the energy fund, review of feed-in tariffs and support for biogas projects among other things. - John Kachembere

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