Govt mulls water tariff reduction for Old Mutual's power plant

HARARE - Government is mulling a reduction in water tariffs to encourage power generation at a $5,7 million mini-hydro power plant bankrolled by financial services group, Old Mutual Zimbabwe in Chipinge District, southeast of Zimbabwe.

Energy minister Samuel Undenge said he was in talks with his Environment, Water and Climate counterpart to reduce water tariffs for the 1,6MW plant that has capacity to meet a third of Chipinge’s 5MW power demand.

Undenge said hydro power projects must not be charged commercial rates as the water does not get wasted, adding it will also reduce the cost of doing business.

“We want to create a conducive environment for private investors and to reduce the cost of doing business. To this end, let me point out that my ministry has started engaging the ministry of Environment and Water so that rates charged for use of water are reduced,” Undenge said at the commissioning of the mini-hydro power plant in Chipinge last week.

Old Mutual group chief executive Jonas Mushosho said the project, which commenced in November 2014, showed Old Mutual’s interest in building the country’s infrastructure.

Finance minister Patrick Chinamasa, who attended the commissioning of the plant, said he was willing to offer incentives to investors in strategic sectors such as energy, including tax holidays, national project status, exemption from payment of withholding tax and cost effective tariffs.

Undenge said: “For irrigation the (water tariff) rate is a commercial one because for irrigation you take the water from the river, irrigate the land, the water does not go back to the river, but with this project, no water is wasted. The water is just diverted by a pipe, it goes through the turbines, generates electricity and it goes back to the river. There is no water lost, that’s why we are arguing that the rates should be lower than the commercial rates.

“I’m sure we are going to succeed; minister Chinamasa who is the guest of honour will help me to put forward that argument.”

Government is keen to boost the participation of private investors in the renewable energy sector even offering incentives including tax holidays and non-payment of duty for equipment.

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