Govt suspends duty on Zesa equipment

HARARE - Government has suspended duty on Zesa equipment, in a move that could help the State parastatal import spares.

A Government Gazette published yesterday stated that Patrick Chinamasa, the minister of Finance, has in terms of section 235 of the Customs and Excise Act, rescinded duty on power equipment.

“The Customs and Excise Regulations 2003 published in statutory instrument 257 of 2003 are amended by the insertion of the suspension of duty on power equipment, critical spares and transformer components imported by Zesa Enterprises, Zimbabwe Electricity Transmission and Distribution Company and successor company of Zimbabwe Electricity Transmission and Distribution Company and Zimbabwe Power Company,” reads the government gazette.

The suspension of duty is valid for one year.

The withdrawal of duty comes as a relief for the power company, which has been struggling to service its power stations, leading to massive power cuts.

The suspension of duty comes hard on the heels of a $319 million deal between the government and the China Export and Import Bank for the expansion of Kariba South hydro power project.

The project is expected to add 300 megawatts to the national grid, a development set to ease power outages.

Zimbabwe’s current electricity generation capacity is about 1 200MW against a peak demand of over 2 200MW.

The loan from the Chinese bank would be used for engineering, procurement of equipment and actual construction to be done by the winning bidder, a Chinese firm called Sino-Hydro.

Comments (2)

Has anyone ever actually looked at the waste in the so called "parastatals"? I say "the so called" because they are like anything else in Zimbabwe, an extension of the ruling party. Most of the failures can be easily tracked to poor policies, foolhardy decisions that are made for political expedience with no regard for huge and detrimental consequences. ZESA has become increasingly unable to meet the demands of Zimbabwe's electrical needs? Why is this. The population of Zimbabwe has not increased that much, in fact one can argue that with many people in the diaspora buying solar panels and generators, it should be a bit better but alas. The leadership in Zimbabwe knows what I am talking about and they hide behind stupid excuses, why do we make deals to export electricity before meeting domestic needs? It is because we trying desperately to find some cash and or exchanges for other goods, and yet we know that the disorganized land redistribution was responsible for gutting commercial farming and agriculture, now we need beef from Namibia etc. If the government got out of the way and allow these organizations to be run by competent and qualified people not the dumb generals, then we may start moving in the right direction

tino - 16 November 2013

The government is broke and therefore needs all the money it can get. The problem in Zimbabwe is understanding basic economics and business practices. ZESA's business is generating distributing and selling electricity. It is not ZESA's business to make/import transformers. A company called Southwales used to make all the transformers until some misguided executive thought it made economic sense to establish a company that makes all the items used by ZESA. Unfortunately businesses are established to serve institutions they don't own/control. Bitcon was established to make tar but the company does not own the tarred roads, Hwange colliery's major customer was ZESA but at the time of establishment Anglo did not own the power station. So the point is ZESA must buy transformers from the private sector so that government can make money through taxing these companies and fund ZESA. Government has been duped on several occasions to issue National Project status(NPS) to companies who import all and sundry for the project. NPS confers duty free status for all materials imported for the project. In this case the Chinese who have most of the ZESA contracts are going to obtain all the items from China and not pay duty. So the entire project at the end of the day will not benefit Zimbabwean companies yet we complain of capacity utilization. The Chinese currently have projects worth over $1.5 billion for Hwange and Kariba South. They have also brought in all the materials used for the pre-paid meters project. This SI will prejudice Zim of no less than $200m in direct duty payments and several billions of dollars in downstream benefits. But wait a minute, why is this concession being extended after the contract was long awarded. Was duty not part of the price. Incentives encourage economic development but this is not a case that qualifies for an incentive.

Timothy Thorton - 17 November 2013

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