Govt mulls tax incentives for IPPs
RYAN CHIGOCHE
Government is contemplating introducing tax incentives that will help improve the economics of either new investment or operations of the country’s independent power producers (IPPs), Business Times can report.
Energy and Power Development minister, Soda Zhemu, said the incentives would promote the development of new energy sources and technologies, improve attraction and production of energy sources, especially the solar photovoltaic projects.
To date, the Zimbabwe Energy Regulatory Authority has licenced close to 100 IPPs, with the capacity to generate about 8 000MW.
“We have seen several investors venturing into solar power generation plants and exporting the power into the national grid. I believe that though this is quite commendable more can still be done in terms of having producers joining the fray as well as enhancing production capacity,” Zhemu said.
“I am glad that in our midst we have officials from the ZERA whose mandate is to ensure that independent power producers are incentivised to channel more resources towards power generation.”
He said IPPs will be incentivised by being given tax holidays among other ways.
Government has been hoping that IPPs would complement ZESA , which is struggling to meet national demand at peak periods, estimated to be 1 800 megawatts (MW). The State-owned power utility is generating about 1 000MW daily. To cover for the deficit, ZESA is importing from regional power utilities especially from Eskom of South Africa and Cahora Bassa of Mozambique.
However, the majority of IPPs have failed to take off , even in cases where some were awarded licences more than 15 years ago.
There have been calls for Zimbabwe to adopt the generation of green sustainable energy to cover the said energy deficit.
Zimbabwe is one of the African countries that hopes renewable energy technologies will help to address their energy problems.
The country has huge and diverse renewable energy potential.
Its sustainable energy portfolio could include solar, hydro, biomass, and, to a limited extent, wind and geothermal.
The 2030 Agenda for sustainable development adopted by all United Nations Member States in 2015 provides a shared blueprint for peace and prosperity for people and the planet now into the future.
One of the key tenets of the blueprint talks about building sustainable cities and communities.
Zhemu said importance must be given to the use of these alternative sources of power.
“The energy and power development sector also has a crucial role to play in helping Zimbabwe build sustainable cities and communities. This role can effectively be executed if we prioritise power generation from sustainable sources such as solar and wind, therefore, being alive to the global sustainable development agenda.”
The push for the use of green energy sources comes as global financiers have pulled the plug on financing coal-powered stations as they move to reduce the effects of climate change.
Chinese banks recently told ZESA that they will not be funding new thermal stations.
