12 November 2012

Zimbabwe: Energy Sector Turns to Biti

THE Zimbabwe Energy Council has called on Finance Minister Tendai Biti to earmark a minimum of 18 percent of the infrastructure budget for energy projects when he prepares the 2013 Budget. "Energy sector should be allocated a minimum of 18 percent of the hard infrastructure budget," the council said. "In 2012, energy was allocated 8 percent which was an equivalent of US$47, 5 million.

"Water and Sanitation was allocated 18 percent of the (2012) capital budget. There is need to understand the energy-water nexus,"

Zimbabwe requires 2 200 megawatts at peak demand but faces an acute power shortage and that has spawned rolling power cuts.

Shortage of power has stifled company operations, with 10 percent of those interviewed by the Confederation of Zimbabwe Industries in its manufacturing survey citing power as the main constraint.

The council noted that it was impossible to develop one independent of the other and expect to achieve the desirable results.

For instance, the council said, no commercial centre would ever have a stable water supply unless reliable power was available. There was need to marry water and sanitation projects to energy programmes.

Power is a very expensive business, requiring great financial investment. It costs US$2,5 million to produce one megawatt and the gestation period of bringing a power station to life is about five years.

The council contends that there is need to start investing in the energy infrastructure now, for the country to start enjoying the benefits in the next five years.

"Zesa Holdings and its subsidiaries are the backbone of power production in Zimbabwe, Zesa has requested for US$72,5 million. We believe this is a sustainable and fair figure that needs Government support," said the council.

The council said the funds need to be availed quickly rather than towards the end of the year to make economic sense and meaningful impact.

It added that the financial resources need to be fully supported by both the Government direct fiscus provisions as well as favourable fiscal policies.

Power utility Zesa is in the process of rehabilitating the country's major power generation plants, Hwange Thermal and Kariba South Hydro.

After rehabilitation and expansion of Hwange Thermal Station with an installed capacity of 920MW, and Kariba Hydro Power Station with a generation capacity of 750MW will add 900WM the national grid.

To enhance efforts at increasing power generation and transmission the council wants Government to consider a five-year extension of waiver of duty on imported spares and materials used in the energy.

It has also suggested that the Government scrap the cumbersome and bureaucratic rebating system on reinstatement of waiver of Value Added Tax on spares and materials used in the energy sector.

Further, ZETDC needs support to upgrade its billing and collection system. Capacity building in terms of technical and human capital expertise and hardware and software system is also a necessity to enable transmission firm to efficiently and effectively collect payments.

But the council urged the Government to also vigorously pursue other low cost energy projects, public or private, and these include solar, bio-fuels and methane gas to effectively deal with power shortages.

However, the council also advised that the Government needed to set economic power tariffs to encourage investment in the sector and also ensure that operators achieve sustainable viability.

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