Engineers at a geothermal steam generation site in Nakuru. Tanzania has won concessions from EAC to ship in electric power generating machinery tax free through Tanesco to ease the power shortage. File
Kenya and Tanzania have won major concessions after the Council of ministers of the East African Community approved their requests for special tax waivers on imports of food grain and power generation equipment.
The EAC ministers on Friday cleared Kenya to ship in duty-free maize for a period of six months while Tanzania was handed a special conditional waiver to import power generation equipment without paying duty over the next one year.
Tanzania’s request was however granted on condition that it presents a detailed list of the power generation equipment scheduled for importation under the scheme by end of June.
Parts of power generation equipment imported into the EAC market are currently zero-rated but Tanzania is seeking to ship in complete machinery or equipment.
Tanzania was also cleared to import wheat duty-free until December to cover for food deficits in its domestic market.
“The EAC Secretariat now has the go-ahead to gazette the provisions by July 1 as per agreements between the member countries,” David Nalo, the permanent secretary in the EAC Affairs ministry said.
Kenya had made application to the EAC to make duty-free shipments of maize to cover for a major deficit in production. The plea followed a Legal Notice number 59 of June 10 by President Mwai Kibaki that declared the current drought a national disaster.
Finance minister Uhuru Kenyatta has since released a calendar to guide the duty-free import scheme through which the country targets supplies from Malawi and Zambia.
“Any maize imported into the country between June 10 and December 31, 2011 will be cleared through customs without payment of duty,” the minister said.
Failed rains and shortages of planting seeds are expected to affect maize output this year, leaving the country in need of imports to cover for shortfalls. This situation has seen prices of maize climb in the past few months, leaving most households feeling the heat since the commodity is a main staple food.
A 90kg bag of maize sells at an average Sh4,500 from Sh3,000 in April. At the turn of the year, the price was Sh1,800.
The falling supplies have seen the number of people in need of humanitarian assistance climb to 2.4 million, up from 1.6 million in January 2011, says the Food and Agriculture Organisation.
Kenya is expected to import about 2.3 million tonnes of cereals to bridge a production deficit over the 2011/12 window, says the organisation. Its preliminary forecast show the country’s 2011 maize production is to reach 2.5 million tonnes, which is about 11 per cent short of last year’s.
On the part of Tanzania, officials are expected to find major relief after their request for duty-free imports of wheat and electricity generating equipment was granted.
“It was approved that Tanzania makes the imports of power generation equipment through its power utility firm to help address an energy crisis that is currently affecting her economy,” Mr Nalo said.
Tanzania’s state-run power company, The Tanzania Electric Supply Company (TANESCO) - now has in place a daily 12-hour power cuts for an unspecified period because of low water levels at hydropower dams and a shortage of fuel for thermal power generation.
The power crisis has dragged on since December last year with analysts such as the International Monetary Fund (IMF) warning of possible knocks on the country’s economy.
Uganda also emerged a winner from the talks after the EAC leadership allowed an extension of a special duty exemption scheme on its industrial products.
The ministers however agreed that goods exported from Uganda produced by industries enjoying the remission should attract the EAC Common External Tariff (CET) and that this should apply to all goods that enjoy duty remission exported by the Partner States
“Uganda will have the special scheme in place for another six months until a comprehensive study on the impact of the scheme on the economies of partner states is determined,” Mr Nalo said.
The EAC set a deadline of December 2011 for the report to be handed in for consideration after Kenya and Tanzania warned of possible stagnation in the establishment of a seamless market arrangement.
“The continued existence of the preferential treatment for Uganda’s industrial goods could hamper the opening up of the regional markets,” the PS said.
The contentious exemption scheme, commonly called The Ugandan List, allows the country’s industrialists to import some 135 types of industrial inputs without paying the 10 per cent common external tariff that other member states apply on such goods. Uganda successfully lobbied for its extension for five years up to 2010.
