Government has raised electricity tariffs for all users, with the domestic and agriculture sector users getting a subsidized rate as a measure to improve viability to the power utility company, ZESA which has been reeling from an unsustainable tariff regime in the wake of power shortages.
Presenting the mid-term budget review statement in Parliament this afternoon, Finance and Economic Development Minister, Mthuli Ncube raised the electricity tariff for non-exporting companies from 9.86 ZWL cents equivalent of 1US cent to 45 ZWL cents equivalent of 5 US cents.
Comparably, the tariff for domestic users has been raised from 9.86ZWL cents to 27 ZWL cents/ 3 US cents.
The development is part of the government’s Power Supply Strategy meant to capacitate the struggling power utility firm in heavy debts.
He however said the energy regulator; Zimbabwe Energy Regulatory Authority (ZERA) will give necessary implementation details in due course.
Revenue will hence be ring fenced in a special account to facilitate for importation of electricity to alleviate power shortages.
In line with proffering alternative energy sources, the Minister has removed duty on lithium iron solar batteries in order to encourage usage of solar and ease demand on the national electricity grid.
The minister also proposed a ZWL$ 42 million supplementary budget for various power generation projects such as the Hwange Unit 7 and 8 expansion, Kariba dam rehabilitation and Batoka Hydro electricity project.
In order to enhance investment into the mining sector, the government has scrapped platinum and diamond from the reserve list of the indigenization policy.
Prior to this, diamond and platinum were the only two minerals left applying the 51-49 percent indigenization threshold in favour of local ownership, a case that was widely viewed as detrimental to the attractiveness of the sector to foreign investors.
“Platinum and diamond are now removed from reserved list and shareholding of these investors will be negotiated amongst investors,” Ncube said.
The budget also provided supplementary funds in various sectors such as food security and farming, social welfare, public service cushioning, and stimulation of agriculture and farming.
As a support measure to the local manufacturing sector, the government has removed duty on materials for local electrical manufacturers and custom duty on selected motor vehicle filters.
The minister increased the inter-mediatory money transfer tax free threshold from the ZWL$ 10 to ZWL$ 20 in line with economic developments that have taken place during the course of the year.
Having realized growing levels of non-tax compliance in the corporate sector, the government has also increased tax payer interest on debt from five percent to 25 percent.
However the intervention remains highly prone to criticism from business particularly at a time most businesses are finding it difficult to sustain in the prevailing harsh economic conditions.