(MENAFN- The Peninsula) AFP
Pretoria: South Africa unveiled on Wednesday new tax incentives to encourage investment in the production of clean energy to help the country battle an energy crisis that has sparked worsening blackouts.
Starting March 1, 'businesses will be able to reduce their taxable income by 125 percent of the cost of an investment in renewables,' Finance Minister Enoch Godongwana said in presenting his annual budget to parliament.
'We will also introduce a new tax incentive for individuals to install rooftop solar panels to reduce pressure on the grid and help ease' the scheduled blackouts, also known as load-shedding, he said.
The continent's most industrialised country has been labouring under a devastating energy shortfall for months, largely due to under-investment in Eskom's ageing and poorly maintained power plants. Read Also
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Earlier this month, President Cyril Ramaphosa announced a national state of disaster and the appointment of an electricity minister to help intensify the response to the crisis.
South Africa has suffered blackouts over the past decade but more recently they have become 'more persistent and prolonged' and are wreaking havoc on the economy, in particular the country's freight and logistics network, Godongwana said.
The government had already said last year that it was taking over half of Eskom's debt pile of 400 billion rand ($22 billion).
That bailout for the firm that provides almost all of South Africa's electricity will send national debt soaring to 5.84 trillion rand, or 73.6 percent of GDP in the next three years, according to the treasury.
Servicing this debt will cost around 336 billion rand this year, Godongwana said, meaning the country now spends more money on debt than it does on healthcare, peace and security or social development.
'These are resources that could otherwise be used to address pressing social needs or to invest in our future,' he said.
'Government debt is high... our economy is facing significant risks,' he added.
The power outages have weighed on South Africa's growth prospects, with growth this year expected to reach just 0.9 percent after 2.5 percent in 2022.
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