The Zimbabwe Energy Council has said players in the sector should look up to pension funds to finance their power projects.
BY TATIRA ZWINOIRA
According to the council, since pension funds are an accrual of funds for employees only redeemable when they retire, these funds thus provide a sustainable source of long-term finance. As at December 31, 2016 the pension fund industry had assets of $2,3 billion.
Speaking at a breakfast meeting on Funding Energy Projects Through Pension Funds yesterday in Harare, energy council executive director Panganai Sithole said pension funds provided energy players with an alternative source of finance.
“We are here today to discuss opportunities within pension funds to fund energy projects. We believe there are opportunities to fund energy projects in pension funds,” he said.
Financing for current energy projects including power, water and roads are already in the billions and as such have been difficult in funding.
According to Intellego Investment Consultants managing consultant Welcome Mavingire, energy players could source funds through debt, equity and alternative investments.
Through debt, this could be done by the issuance of long-term bonds.
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With equity investment individuals and firms in the energy sector could buy and hold shares of stock on a stock market public through pensions funds listing on a stock exchange or alternative trading platform.
Alternative investments for the energy sector include structured financing options with both assurance of fixed income and participation for the different project.
Zimbabwe Association of Pension Funds director general
Tendayi Kakora said the core business of a pension fund was investment so energy players could find ways in financing their projects.
“The core business of a pension fund is investment so that people get all their money when they retire with a good return. Pension funds, yes, are there for retirement income provision, but they also play an equally important role of mobilising resources for development. When people contribute their money is put into that fund and it goes into the market in whatever vehicles the trustees decide to put that money in,” she said.
Kakora said when pension funds are on the market anyone in the economy can buy them which is where energy players could come in.
