Govt to hold stake in all energy firms

THE Government will hold a stake in all energy resources to be extracted by private players to ensure that output will benefit the growth of the local economy at the expense of lucrative offshore markets.

Mines and Mining Development Minister Walter Chidhakwa said the involvement of Government in the operations of private players extracting energy resources was solely to guard against a situation whereby the firms end up being reluctant to channel the resources for national needs in pursuit of lucrative offshore markets.

"We have taken a position that Government will have a stake in the exploitation of all energy minerals, this includes your coal, coal bed methane gas, natural gas and uranium if its deposits are explored.

"We don't want a situation whereby if you give a certain company a coal concession that particular company seeks lucrative market elsewhere and is reluctant to supply our local power stations," Minister Chidhakwa said.

He said the role and position of Government in the extraction of energy resources would be included in the amended Mines and Mineral Act.

Zimbabwe School of Mines chief executive officer Mr Dzingirai Tusai said energy resources were strategic minerals and as such Government should be involved in their exploitation.

"Those are strategic minerals and the Government despite being the regulator should be closer to see how the strategic resources are actually exploited. I see it reasonable for it (Government) to do that because you can't just relax and say people who have the capacity and finances to mine should just mine," he said.

However, Coal Producers and Processors Association (Copaz) president Dr Cephas Mandlenkosi Msipa said there was a need for Government to clarify the stake which it intends to hold in the exploitation of energy resources by private players.

"If by stake the Government means shareholding then it will be interesting to see how Government's share of equity will be injected into the diverse companies engaged in the coal, solar, hydro, uranium and even agro-based energy sector.

"Furthermore it will even be more interesting how this equity will be managed at board and executive level. Most importantly though is the question as to what are the benefits that are expected to accrue in regulatory as well as to the fiscus in the form of dividend payments," Dr Msipa said.

He said empirical evidence to date does not suggest that Government has derived a great deal of dividend income from its shareholding in existing energy entities.

"On the other hand, we have argued that the Government is currently a major stakeholder in energy companies and obviously other sector companies through mechanisms such as Special Grant licencing fees, MMCZ (Minerals Marketing Corporation of Zimbabwe) export levies, Zimra (Zimbabwe Revenue Authority) PAYE (Pay as You Earn) and VAT (Value Added Tax), NSSA (National Security and Social Authority) and ZIMDEF (Zimbabwe Development Fund) remittances in addition to Government interests in more subtle fiscal revenue sources such as petroleum and non-petroleum excise duties and electricity tariff controls," Dr Msipa said.