South Africa reneges on its power supply contract to Zimbabwe

HON. MARKHAM:  Good afternoon Mr. Speaker, thank you.  Mr. Speaker, my question is to the Minister of Energy and Power Development pertaining to the Independent Power Producers (IPPs).  Mr. Speaker, the IPPs are already on their knees because they borrowed and invested money all in United States Dollars.

The payment from the Government of Zimbabwe is in Zimbabwe Dollars local which the Government insists on.  Can the Minister apprise us on what he plans to do with these people, particularly when the interbank rate is starting to move rather quickly?  What is Government policy to keep the independent producers that are in power viable?  Secondly, those who were about to come onto the grid, what encouragement have they got to finish the job if they are only going to be paid in the receiving currency?  Thank you.

THE MINISTER OF ENERGY AND POWER DEVELOPMENT (HON. SODA):  Thank you Mr. Speaker Sir.  Mr. Speaker Sir, we have a Government Implementation Agreement which was issued by the Ministry of Finance and Economic Development precisely on 19th December, 2022.  It was announced by the Minister of Finance and Economic Development as a means to mitigate against the risk of currency convertibility.

It has been an issue for quite some time where investors would bring their money from outside the country, develop a project in Zimbabwe but at a time when they wanted to repay for the loans that they would have procured for the purposes of developing that project, it was a nightmare for them.  Also, when project developers were intending to expatriate proceeds of their investments outside the country, they were facing that challenge due to the issues of our currencies.

The Ministry of Finance and Economic Development has come up with a Government Implementation Agreement which is a mechanism to deal with the currency issues and the expatriation risks.  We now have something in place and I will advise the Hon. Member, including others, to speak about what the Government of Zimbabwe is doing to incentivise project developers and to mitigate against risks that he has just spoken about; not only that, we also have quite a number of incentives to attract or to make the investment environment to become conducive. 

We have tax rebates that are on offer, the Government of Zimbabwe is also assisting project developers with land allocation for the development of their projects including tax holidays that are also on offer.  So those, including the Government Implementation Agreement are mechanisms that the Government has put in place to ensure that projects are developed and risks are mitigated.  I thank you Mr. Speaker Sir.

HON. MARKHAM:  Thank you Mr. Speaker.  Mr. Speaker, my point is, if you are not making money and you are on your knees tax incentives are irrelevant.  What I would like to ask the Hon. Minister is, I cannot understand why when we import we pay dollars.  So, we are paying a foreigner money in dollars.  When we get an investor who invests his dollars here, we fail to pay him dollars, yet a large portion of ZESA revenue is from the consumer.  I cannot understand why the Government is refraining from paying the IPPs dollars unless they do not want them to operate.  Thank you.

HON. SODA:  Mr. Speaker Sir, it is not about unwillingness by the power utility to pay project developers in dollars.  It is because the money is not adequate.  We are all aware that we supplement our locally generated power with imports and we promulgated a policy to deal with collection of revenue in foreign currencies specifically for the purposes of paying for power imports – that money is not adequate until a time when we would have replaced the capacity that we are importing with locally generated power, just like we are doing with Units 7 and 8.

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