Power equipment exempted from import duty

HARARE - Power utility Zesa’s subsidiaries have been exempted from paying import duty on spares and equipment following provisions gazetted last week under Statutory Instrument 113 of 2016.

The government gazette published on Friday stated that Finance minister Patrick Chinamasa had in terms of Section 235 of the Customs and Excise Act, rescinded import duty on power equipment.

This comes as Zesa has been struggling to service its power stations, leading to power cuts.

“The Customs and Excise (suspension) Regulations, 2003, published in statutory instrument 257 of 2003 are amended by the insertion of…suspension of duty on power equipment, critical spares and transformer components imported by Zesa Enterprises (Zent), Zimbabwe Electricity Transmission and Distribution Company (ZETDC) and Zimbabwe Power Company (ZPC),” read the gazette.

Zent, ZETDC and ZPC are subsidiaries of Zesa.

The duty suspension is valid for a year.

The reprieve is on the back of ZETDC —currently suing at least 200 local authorities, State enterprises and private companies to recover $1 billion-plus in unpaid power bills — is looking at various ways to improve its balance sheet.

The firm is facing challenges in servicing its payment obligations to South Africa’s Eskom and Mozambique’s Hidroeléctrica de Cahora Bassa (HCB) due to non-payment of bills by consumers.

The Zesa subsidiary’s indebtedness implies that the company has no capacity to exploit its balance sheet for further borrowing to support planned electricity generation projects across the country.

It also requires funds to rehabilitate its old infrastructure.

For the past four years, the power utility has been pressing government to approve a tariff hike but failed to get regulatory approval due to the fact that the increase would undermine efforts to revive the country’s struggling economy.

On the other hand, a number of companies, including major mining firms, have been calling for a reduction in tariffs to cushion them against the effects of the depressed international commodities market.

Post a comment

Readers are kindly requested to refrain from using abusive, vulgar, racist, tribalistic, sexist, discriminatory and hurtful language when posting their comments on the Daily News website.
Those who transgress this civilised etiquette will be barred from contributing to our online discussions.
- Editor

Your email address will not be shared.