Zimbabwe: Tourism Sector Bemoans Govt Forex Directive for Electricity

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The Tourism Business Council of Zimbabwe (TBCZ) has said the directive by government for hotels in Victoria Falls to pay their electricity bills in foreign currency will further burden a sector already weighed down by taxes.

Kudzai Kuwaza

Government has directed hotels in the resort town to pay electricity bills in foreign currency to help the cash-strapped power utility to import power. The failure by power utility Zesa to pay Eskom of South Africa and HCB of Mozambique US$83 million for supplies has resulted in the two utilities drastically cutting supplies to Zesa from 450 megawatts to just a mere 50 megawatts. This is one of the reasons the country is experiencing daily power cuts that stretch to 18 hours which had major social and economic ramifications.

Government has since paid Eskom US$10 million to enable negotiations for the restoration of power imports.

TBCZ chief executive Paul Matamisa told businessdigest last week that the directive will only add costs on tourism operators.

"As the tourism sector, the Reserve Bank of Zimbabwe takes 20% of our foreign currency earnings which should cater for essentials such as the provision of power. To then charge electricity bills for hotels in Victoria Falls in foreign currency is double taxation," Matamisa said.

He said the sector will engage government over the issue.

The tourism sector has complained over the tax regime affecting the sector, particularly the 15% value-added tax on tourism, which they say has made the Zimbabwean product more expensive. The cash-strapped government in January 2016 unilaterally introduced the levy on foreign tourist accommodation in a move seen as a desperate measure to augment the government's dwindling revenues.

Matamisa pointed out that the directive is in conflict with Statutory Instrument 142 introduced by government in June this year which outlawed the use of multi-currencies in local transactions. The central bank has since tweaked the regulations to allow some players such as chrome miners to transact in foreign currency.

However, hotels in the resort town are divided over the directive with some of them saying they cannot afford it while others have been advocating for it, provided it assures them with uninterrupted supply of electricity.

Hoteliers in the resort town have faced difficulties in procuring fuel, which is in short supply, to run generators for their hotels as they are experiencing power cuts lasting up to 12 hours a day.

This comes at a time the Zimbabwe Regulatory Authority increased the price of fuel this week. Petrol has gone up to ZW$7,55 from ZW$7,47 with diesel going up to ZW$7,22 from ZW$7,10. This is the second time within a week that the price of fuel has been increased.

Analysts have pointed out that the directive, coming soon after phasing out the multi-currency regime, reflects policy inconsistency in government.

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