Zim tax holidays to attract investors

CAPE TOWN – Zimbabwe plans to use tax holidays and other incentives to court foreign investors in its energy sector, which has experienced severe shortages, the energy minister said on Wednesday.

Zimbabwe’s unity government is keen to get more investment into the country, where its energy sector has fallen in disarray following years of economic decline.
The country produces 1 000 megawatts of electricity while its peak demand is about 2 200 MW, forcing it to import from neighbours.
‘We can negotiate tax holidays… We also have exemption for payment of holding taxes and we have guaranteed dividend payment and repatriation,’ Elias Mudzuri told an African power conference.
‘We are coming up with a new culture where we are allowing a lot of private investors to invest and be able to repatriate their money, or sell their energy through Zimbabwe to all the SADC markets,’ he said.
Mudzuri said the tax holidays were not open-ended and could be short-term only.
‘It depends who is the investor. So far the response has not gone into detailed negotiations, but there has been overwhelming response from different investors coming to enquire,’ he said.
He said Zimbabwe was providing companies with independent power producer certificates. ‘They are given immediately if we think that they’ve got a substantial claim on an area where they can do something,’ he said.
Mudzuri said there were ample opportunities for investors in the country’s diverse and abundant energy resources, particularly coal, a major source of the world’s power.
‘We have investment opportunities with 26 billion tonnes of coal reserves available for power generation, which translates into 8 000 years of use if we use the current consumption of three million tonnes per annum,’ he said.
Mudzuri said there was investment potential for 5 000 megawatts on the Zambezi River, and Zimbabwe had an estimated 40 trillion cubic feet of coal bed methane that could be exploited.
However, he said the country faced serious challenges to boost its energy sector, which was vital for its overall economic recovery.
Among these constraints were a shortage of working capital, a lack of skills and vandalism as people stripped and stole whatever could be resold.
‘We have unprecedented vandalism due to poverty. People just vandalise and sell what they can sell,’ he said. -Nampa-Reuters