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SENATE HANSARD - 26 JUNE 2013 VOL. 22 NO. 30

PARLIAMENT OF ZIMBABWE

Wednesday, 26th June, 2013

The Senate met at Half-past Two O'clock p.m.

 

PRAYERS

( MADAM PRESIDENT in the Chair)

ANNOUNCEMENT BY MADAM PRESIDENT

BILLS RECIEVED FROM THE HOUSE OF ASSEMBLY

MADAM PRESIDENT: I have to inform the Senate that the following Bills have been transmitted to the Senate from the House of Assembly: the Electricity Amendment Bill (H.B. 3, 2013) and the Income Tax Amendment Bill (H.B. 5A, 2013).

SECOND READING

ELECTRICITY AMENDMENT BILL (H.B. 3, 2013)

First Order read: Second Reading: Electricity Amendment Bill [H.B. 3, 2013].

THE MINISTER OF ENERGY AND POWER DEVELOPMENT: Thank you Madam President.

1. INTRODUCTION

1.1 The passing of the Electricity Act [Chapter 13:19] in 2002 introduced the electricity sector regulation and paved way for the participation of private players in the sector.

1.2 The Zimbabwe Energy Regulatory Authority (ZERA) is now in place following the enactment of the Energy Regulatory Authority Act [Chapter 13:23] in August 2011.

1.3 There is need to separate the electricity transmission and distribution business in order to create an electricity bulk supply market that will facilitate and support Independent Power Producer (IPP) investments. The separation of business will also allow privatisation of the distribution function and consequent improvement in service delivery

1.4 The objective of this amendment is to proffer a power sector restructuring solution that will enhance the investment environment and improve service delivery.

1.5 The proposed restructuring process is in line with the National Energy Policy Implementation strategy.

2. JUSTIFICATION FOR RESTRUCTURING THE POWER SECTOR

Fulfilling the Initial Objectives of the Electricity Sector Reform

2.1 The objectives of the electricity reform were to:-

  • Remove the ZESA monopoly and increase generation capacity,
  • Increase access to available electricity,

· Improve overall efficiency of service delivery through attracting private sector participation and

· Establish regulation of the sector.

2.2 The reform saw the establishment of the Regulator. However, the electricity market structure has not developed to a competitive market.

  • The market structure is a single buyer model where competition is only in power generation in which ZPC is currently a natural monopoly due to lack of new investments by other players.

· ZETDC is the single buyer responsible for purchasing power and selling to all customers as well as exporting power. All power producers have Power Purchase Agreements with ZETDC.

2.3 There is need to move to a fully competitive market where there is competition in both power generation and supply.

Creating a conducive environment for Investment

2.4 The sector is dominated by ZESA Holdings companies (ZPC and ZETDC) who perform all the functions resulting in other players doubting fairness in services offered by ZETDC. There is need to separate the functions of players in the power sector; particularly, system and market operations to improve investor confidence.

2.5 Restructuring of the power sector will allow it to benefit from the credit-worthiness of large customers who can be counter-parties to IPP as off-takers or direct investors.

2.6 The restructuring will allow participation by the private sector in electricity supply. Participants will have open access to transmission and distribution networks.

Improving Efficiency in Service Delivery

2.7 Separating Transmission from distribution and the supply businesses will streamline the activities of each business and enhance service delivery.

2.8 Private sector participation in electricity supply in other countries has generally resulted in improvements in service delivery and revenue collection thereby attracting investment as investors are assured of returns.

3. RESTRUCTURING PROCESS

· ZESA Holdings is dissolved, the NGSC is formed to carry out the transmission, systems and market operations.

· ZETDC is unbundled and its transmission functions are transferred to NGSC while the distribution functions remain in Zimbabwe Electricity distribution Company (ZEDC).

4. CONCLUSION

I move that the Senate approves the proposed amendments and that the Bill be now read a second time. Thank you Madam President.

Motion put and agreed to.

Bill read a second time.

Committee: With leave; forthwith.

COMMITTEE STAGE

ELECTRICITY AMENDMENT BILL (H.B. 3, 2013)

Senate in Committee.

Clauses 1 and 2 put and agreed to.

Senate resumed.

Bill reported without amendments.

Third Reading: With leave; forthwith.

THIRD READING

ELECTRICITY AMENDMENT BILL (H.B.3, 2013)

THE MINISTER OF ENERGY AND POWER DEVELOPMENT: I move that the Bill be now read the third time.

Motion put and agreed to.

Bill read the third time.

SECOND READING

INCOME TAX AMENDMENT BILL (H.B. 5A, 2012)

Second Order read: Second Reading: Income Tax Amendment Bill (H.B. 5A, 2012).

THE MINISTER OF ENERGY AND POWER DEVELOPMENT on behalf of THE MINISTER OF FINANCE: Thank you Madam President, I will not take the time for the Senate. This is a very lengthy Bill but in short, what it is doing is to be able to set out what is taxable income and how income that is earned by people that is supposed to be subjected to taxation is going to be defined.

The big thing that it is doing, from the last one, is to change from a source because the current Act says that any income that has a source to be in Zimbabwe is subject to Zimbabwean tax to putting it to a residence base. This means a person who is resident in Zimbabwe; all the income he or she makes is subjected to the Zimbabwean tax law and is only varied depending on whether we have got double taxation agreements with other countries or not. That is the main change that is being done.

What it is also saying is, in making that income for a business, what are the expenses that are allowed to be deducted so that when you have made your gross income you are allowed certain expenses that are incurred when you create that income. What is then taxed is the net as far as a business is concerned and also that is what we are putting in here. There is a lot more tightening of the expenses that are allowed in terms of making that income. The current one has been a bit loose and therefore a lot more people were finding loopholes. This one tightens up the expenses that are allowed. This means that expenses that are not involved; they might be business expenses that are not involved in creating that income are not allowed.

It also combines capital gains within the Income Tax Act and therefore tries to make sure that some of the requirements of Capital Gains, particularly avoiding people who have been stringing along capital gains; when they sell something they do not declare. This is trying to tighten it up and also making sure more importantly that those who are selling their houses called principal residents, if you are over the age of 55; you are exempt from Capital Gains Tax. To a large extent, this is the bulk of this, so it is really explaining what comes into your tax and what you are allowed as a deduction and to make sure that there is fairness in how it is done. I therefore move that the Bill be read a second time.

Motion put and agreed to.

Bill read a second time.

Committee: With leave; forthwith.

COMMITTEE STAGE

INCOME TAX AMENDMENT BILL (H.B. 5A, 2012)

Senate in Committee.

THE CHAIRMAN: Hon. Senators, this is a very voluminous document, so I will request that we move Chapter by Chapter.

Chapters 1 to 20 put and agreed to.

Schedules 1 to 15 put and agreed to.

Senate resumed.

Bill reported without amendments.

Third Reading: With leave; forthwith.

THIRD READING

INCOME TAX AMENDMENT BILL (H.B. 5A, 2012)

THE MINISTER OF ENERGY AND POWER DEVELOPMENT: I move that the Bill be now read the third time.

Motion put and agreed to.

Bill read the third time.

On the motion of THE MINISTER OF ENERGY AND POWER DEVELOPMENT , the Senate adjourned at Two Minutes to Three o'clock p. m.

 

 

 

 

 

 

 

 

 

 

 

 

 

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Senate Hansard Vol. 22 SENATE HANSARD - 26 JUNE 2013 VOL. 22 NO. 30