Govt suspends duty on Zesa equipment
Lloyd Gumbo Senior Reporter
Government has suspended duty on Zesa equipment for one year, a development that is expected to significantly reduce the cost of power projects that are underway. Finance and Economic Development Minister Patrick Chinamasa announced the scrapping of duty in the Government Gazette published last Friday through Statutory Instrument 113 of 2016.“The Customs and Excise (Suspension) Regulations, 2003, published in Statutory Instrument 257 of 2003 (hereinafter called the principal Regulations), are amended by the insertion of the following after Section 9K.
“9L. 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).
“Subject to this section and to such conditions as the commissioner may fix, a suspension of duty shall (for a period of one year with effect from date of publication) be granted on power equipment, critical spares and on transformer components imported for ZESA Enterprises (ZENT, Zimbabwe Electricity Transmission and Distribution Company (ZETDC) and Zimbabwe Power Company (ZPC). . .”
Zesa chief executive Engineer Josh Chifamba welcomed the development saying it would go a long way in reducing cost on capital projects. “We welcome the development because it will reduce the cost of capital projects, as this means that duty is suspended on capital equipment,” said Eng Chifamba.
“This will also reduce the tariff to our clients since the duty component would have been waivered. On the part of ZENT, it means that the company will make their products very competitive as there would be no duty on their raw materials. We are glad that Government has realised that this is a sector that needs investment. By suspending duty, it means most of our capital projects would not be too expensive.”
Eng Chifamba said a number of projects that the power utility embarked on would benefit from the development. The Parliamentary Portfolio Committee on Mines and Energy last year, recommended that Government enhances the Ease of Doing Business in the energy sector.
In its report, the committee “observed that most potential investors in the energy sector are being scared away by a number of statutory fees that the investors are required to pay”. “When these investors compare these fees with what is obtaining in other countries in the region, Zimbabwe’s fees are higher than in most countries in their region. For example, the Hwange expansion project, EMA requires fees to the tune of about US$22 million.
“The committee therefore recommends that large and national projects, which have the capacity to solve the energy problems be exempted from paying these fees or the fees are significantly reduced.
“Another option would be to defer the payment of the fees to a later time when the investor would have started operating and have re-occupied a large part of the capital outlay,” reads the committee’s report.