Zimbabwean legislation signed into law two weeks ago compelling companies with assets worth more than $500,000 to be 51 percent black-owned has confused investors and should be changed, Energy and Power Development Minister Elias Mudzuri said.

“That law must be changed,” Mudzuri said today in an interview at a conference in Durban. “The law has created a lot of confusion amongst investors and amongst ourselves as ministers.”

Mudzuri’s comments follow a speech by acting Prime Minister Thokozani Khupe last week in which he said the country will reconsider the legislation after investors were scared off. The law is due to come into effect on March 1 and requires affected companies to sell 51 percent of their local units to black investors within five years, according to a copy of the law distributed by Harare-based Veritas Trust, a non-governmental organization.

Zimbabwe is attempting to rebuild its economy following a decade of political turmoil and recession under the leadership of President Robert Mugabe. It has the world’s second-largest reserves of platinum and chrome, after South Africa, and gold, coal, diamonds and nickel deposits. London-based miner Anglo American Plc and South African insurer Old Mutual Plc are among companies operating there.

The law, known as the Indigenization and Empowerment Act, has been passed by parliament without being signed into law by Mugabe. Parliament was controlled by Mugabe’s Zimbabwe African National Union - Patriotic Front party from 1980 until March 2008, after it lost elections to the Movement for Democratic Change party.

‘Serious Transition’

“There has been serious transition in Zimbabwe towards taking global interests seriously,” said Mudzuri, who is a member of the MDC, which has a parliamentary majority.

The country needs about $2.5 billion investment in its electricity network to produce an additional 1,500 megawatts to meet demand, Mudzuri said. Zimbabwe imports as much as 35 percent of its power and experiences frequent blackouts, as underinvestment in its power plants has led to shutdowns and below-capacity operation.

State-owned Zimbabwe Electricity Supply Authority is producing an average of about 1,000 megawatts compared with a target of 2,200 megawatts, he said. Zimbabwe plans to generate an additional 500 megawatts in three to four months, he said.

“Then we will be just load-shedding during evenings and peak hours,” Mudzuri said.

Load-shedding is the term given to planned power cuts made by suppliers rationing electricity.

The country will look at generating additional capacity from coal and hydropower, he said.

By Bloomberg