malvernmugadzikwa
Michael Tome
GOVERNMENT has proposed the exemption of Liquefied Petroleum Gas (LPG) from value-added tax (VAT) as a strategic measure to mitigate the rising costs associated with LPG.
This initiative comes in response to the ongoing electricity supply deficit and the extended periods of load shedding that have adversely affected the country in recent months.
Zimbabwe Energy Regulatory Authority’s (ZERA) maximum regulated price is US$1,78 per kg.
LPG has emerged as a crucial alternative energy source, primarily for cooking and heating purposes during times when power supply is unreliable.
Zimbabwe and other countries in the region are currently facing a deficit in electricity supply, and this has prompted numerous households to use LPG, traditional fuels like firewood and charcoal.
The use of traditional fuels undoubtedly contributes to environmental issues such as deforestation and ecological degradation.
“The region is currently facing a deficit in electricity supply, which has led to prolonged load shedding. In that regard, Liquefied Petroleum Gas (LPG) has served as an alternative energy source, especially for cooking and heating during power outages.
“In order to reduce the cost of LPG, I propose to exempt the product from Value Added Tax, with effect from 1 January 2025,” said Finance, Economic Development and Investment Promotion Minister, Mthuli Ncube while presenting the 2025 national budget yesterday.
To further support the energy sector and enhance the reliability of energy supply, the Minister also suggested the deferment of VAT on capital equipment specifically intended for the energy sector.
This is aimed at facilitating the establishment of a more integrated and robust power generation and transmission framework, which is a key component of the government’s National Development Strategy 1 (NDS1).
According to Minister Ncube, the NDS1 framework seeks to create a conducive environment for independent power producers, allowing them to generate and sell electricity through the national grid.
Currently, the existing legislation allows for VAT deferment on capital equipment that is imported by operators in various sectors, including agriculture, aviation, healthcare, manufacturing, and mining.
This legislative framework has played a vital role in assisting these operators to manage their cash flows, particularly after incurring substantial capital expenditures required for their operations.
“Whereas Government has incentivised the above productive sectors, it is also important to provide the relief to the energy sector, which is a critical enabler of other productive sectors.
“I, thus, propose to extend the Facility to the Energy sector with effect from 1 January 2025,” added Minister Ncube.
In addition to these measures, the government has also extended rebates on customs duties for equipment used in the establishment of solar-powered electric vehicle charging stations.
This initiative aims to promote the adoption of electric vehicles (EVs), which are becoming increasingly important in the push for sustainable energy solutions.
Presently, while electric motor vehicles are subject to a customs duty rate of 40 percent, electric tractors benefit from a significantly lower duty rate of 0 percent, making them more accessible to approved operators in the market.
“Cognisant of the need to promote the use of eco-friendly vehicles, which will result in reduced carbon emissions, I propose to reduce Customs Duty on Electric Motor Vehicles, with effect from 1 January 2025,” added Minister Ncube.
These proposals and legislative updates represent the government’s commitment to enhancing energy accessibility, promoting environmental sustainability, and facilitating a smoother transition towards a more diversified energy landscape in the country.
Bongani Ndlovu
Online Reporter