Government has granted tax reprieve for the contractor of Tokwe-Mukosi Dam and its expatriate staff, as it moves to speed up the completion of the project which has been stalled by shortage of funding.
BY BUSINESS REPORTER
The announcement was made in an extraordinary Government Gazette published last week.
In the notice, Finance minister Patrick Chinamasa said the exemptions were in terms of clause 73 of the agreement between Salini Impreglio and the government for the construction of the dam.
Chinamasa said the ministry was exempting the company income tax in respect of accruals and receipts of Salini Impreglio, payable in terms of section 6 of the Income Tax Act. He said the ministry was also giving exemptions on employment income tax in respect of expatriate employees of Salini Impreglio.
“The consequence of this exemption is that the income accruing to Salini Impreglio and the income accruing to the expatriate employees of Salini Impreglio is exempt from income tax,” Chinamasa said.
In his 2016 National Budget, Chinamasa said the project had been affected by the limited capacity of the budget to finance the remaining works and the outstanding amounts due to the contractor.
He said government’s efforts to mobilise resources from the private sector did not yield positive results.
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He said following consultations between the government and the contractor, “we have been able to pay $40 million to the contractor over August-November this year.
“This has enabled us to liquidate some of the outstanding certificates, as well as capacitate the contractor to mobilise and undertake the outstanding works estimated at $27 million, which include concreting of the right bank spillway, construction of gauging weirs, risk lining of the outlet tunnel and electrification of gate shaft, among others,” Chinamasa said.
“Government, working together with the Infrastructure Development Bank of Zimbabwe is looking at options of mobilising additional private sector funding to complete the remaining works, leveraging on investments already made on the project.”
He said following the payment of the money, the “requirements for outstanding amounts and remaining works is now much lower at $49,4m”.
The dam has capacity to generate 15 megawatts, enough to light up Masvingo. Italian firm, Salini Impreglio was in 2011 contracted to build the dam. The project was supposed to be completed in 31 months, but dragged on due to financial constraints.
The estimated cost of the project was €107m.
