Friday, 6 March 2020

FOREIGN INVESTORS DEMAND FOREX PAYMENTS


INDEPENDENT power producers (IPPS), who are courting foreign investors, have told Parliament the financiers are demanding power purchasing agreements (PPA)s which stipulate that payment be denominated in US$, but payable in local currency so that shareholders are not shortchanged on their dividends.

Appearing before the parliamentary portfolio committee on Energy and Power Development to give oral evidence on the state of affairs in the renewable energy sector, IPPs said prospective foreign partners have concerns around convertibility of currency and repatriation of dividends.

“There is a concern by investors that they may not be able to repatriate their dividends. We have approached the powers that be in that regard, but the Reserve Bank of Zimbabwe (RBZ) says it depends on the country’s priorities.

They say at the moment the priority is fuel, food and medicine so they are not able to give investors assurances because of the structure of the economy,” Kuziva Murapa, chairperson of Aspire, which operates a plant in Chiredzi said.

Fred Muhambi of Custodian Energy Group said Statutory Instrument (SI) 142 of 2019 which outlawed the use of multi-currency and reintroduced the Zimbabwean dollar as the sole legal tender is a big concern for investors because it compels businesses to only charge services in local currency.

“Our major challenge is the issue of SI142 because the investors would want to get assurance that they will be able to access money they would have invested.

“All we want is that we be allowed to index in US$, but payment be done using local currency and the interbank rate is used. That way, the investor is assured that he gets the equivalence of what is due to him,” said Muhambi.

The IPPs also highlighted numerous other challenges, including the negative perception the country has regarding its respect for property and human rights.

“Investors watch what goes on in the country and they have a perception that we might not necessarily share that the country has a poor human rights record. It is a challenge that I think Parliament cannot sort out on its own,” Murapa said.

The Aspire chairperson also told the committee that was being chaired by Zanu PF MP for Hurungwe Central, Doubt Ndiweni, that some investors were also demanding security of tenure on the land where the projects would be located.

“We also have a problem with Arda which we are in partnership with when it demands that before we get a PPA, we must take three or four of its officials around the world to Israel and Cape Town to see our investor at our cost. We have said they can meet them here when they come very soon, but they insist we must take them to Israel which I think is not right,” Ndiweni claimed.

In its presentation, the Zimbabwe Energy Regulating Authority (Zera), represented by its acting chief executive officer Eddington Mazambani, assured the IPPs that they were working on ensuring that their demands were met to enable them to add to the national grid.

“We have engaged the ministers of Energy and Finance and they are currently seized with the issue regarding the blanket exemption of IPPs from the SI142 requirements.

“The renewable energy policy that is coming is also providing incentives for the sector including being given national projects status,” Mazambani said.

Responding to allegations that some IPPs were given preferential treatment when it comes to getting PPAs, Mazambani said if there were such cases and there was evidence, Zera would investigate “because there obviously would have been an inducement”.

Last year, during the inaugural Financial Gazette Annual Energy Innovations Summit, Energy minister Fortune Chasi threatened to scrap the licences of non-performing IPPs in response to some speculative tendencies in the space.

The minister said there were fears that most of the over 70 IPPs licensed by the government were motivated by speculative tendencies.

“It will be a legal process; we will give them a chance to explain. I hope that they will not collude to tell us lies because we will interrogate, and investigate them to substantiate whatever excuses they will give us,” Chasi said then. Daily News

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