By Tinashe Mungazi
Independent Power Producer (IPPs) have expressed fears of being shut out from local investment after government reintroduced competitive bidding in the energy sector which attracted foreign investors.
According to government, the latest policy shift was necessitated by the speculative tendencies exhibited by companies that had been licensed by ZERA to produce power. The same concerns were raised in the mining sector were companies were holding on to claims for speculative purposes forcing government to introduce the use it or lose it policy to jolt action.
Briefing the minister of Energy and Power Development, Soda Zhemu last Thursday before a tour of a solar voltaic power plant in Mabale, Hwange district being constructed by Solgas Energy, the company’s chief operations officer, Petros Kazungu bemoaned the development arguing that it left IPPs exposed to being elbowed out foreign financial muscle.
“Honourable minister, my cry is on the policy perspective what we are pleading with you is for your right office to protect us shock therapy so to speak. We hear of competitive bidding which in a manner has left IPPs exposed we are the front-runners in building these power plants but if floodgates are opened to international players, we definitely won’t survive. I mean the policy itself is not favouring local players who have proven that they can build these power plants,” said Kazungu.
He called for the introduction of a quota system to secure local companies that wanted to venture into the energy sector.
“So I think in your greater scheme of things if we can have a quota especially for those who have proven that they can build these power plants because we have the capacity locally and we are able to do these things. Our vision goes beyond what we see now because we intend to put up 5MW of solar plant in every province.”
According to Solgas Energy’s chief executive officer, Kingston Kamba the company which is wholly owned and financed has almost completed its first phase of constructing a 5MW solar plant and a 28km 33kv interconnection line to the national grid. It now awaits a few components before trials can be conducted by ZETDC before its anticipated commissioning in August. The second phase which is the construction of an additional 10MW is expected to commence shortly after commissioning of the 5MW.
“We are a fully Zimbabwean company and we are excited to have government recognizing the efforts of young entrepreneurs who have ventured into this field. The company was started in 2015 and got license to produce renewable energy. We were lucky to partner with Old Mutual who were looking into venturing into green projects and are funding this project. We are at 98 percent completion and envisage that the commissioning of the 5MW plant will coincide with the ground breaking ceremony for the second phase which is construction of additional 10MW,” he said.
The company has also appealed to government to ring fence foreign currency to enable speedy implementation of projects arguing that its limited availability on the official market was stifling progress.
“We are appealing to you to do more to ring fence forex specific for IPPs then the development of these projects will be a lot more faster. With energy projects panels, invertors and other equipment we have to import from China so we need most of the support in terms of equipment and as long as we are not able to meet our payments we will be doing 5MW every 12-18 months but if we push for the forex collectively work is done much faster. Typically you bid for US$500 000 but you are allocated a US$100 000 and this has really affected us. If we are able to be ascertained a certain portion of the forex as IPPs we will be able to quickly implement these projects such that we are commissioning every six months.”
Responding to the concerns, Zhemu assured IPPs that government would continue to support their work with some issues going to be dealt with on a case by case basis.
“I’m very grateful because you have actually demonstrated that you didn’t acquire license for speculative purposes but to contribute towards ending the crisis that we are having as a nation. I will discuss with my colleagues especially the minister of finance on issues of convertibility of currencies where you are getting your funding in local currency but most of your equipment here is imported. You have actually implemented what we have spoken of as government through policy provisions and we will continue to modify especially from the feedback that you are giving to us. On the issue of competitive bidding you indicated that there is likelihood that you might be closed out as local participants in this energy sector. I want to assure you that will still be looked into but I think at the moment that hasn’t been stopped, the private sector can still be able to access licensing even without following after the competitive bidding process,” he said.
Government has also exempted IPPs with national project status from paying import duty on production materials and given them a 5-year tax break as part of incentives meant to stimulate investment and growth.
