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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