Zimbabwe tax holidays to attract investors in energy

* Country faces power shortages

* Zimbabwe has vast potential for coal power

By Wendell Roelf

CAPE TOWN, May 20 (Reuters) - Zimbabwe plans to use tax holidays and other incentives to court foreign investors in its energy sector, which has experienced severe shortages, the energy minister said on Wednesday.

Zimbabwe's unity government of President Robert Mugabe and rival Morgan Tsvangirai are keen to get more investment into the country, where its energy sector has fallen in disarray following years of economic decline.

The country produces 1,000 megawatts of electricity while its peak demand is about 2,200 MW, forcing it to import from neighbours.

"We can negotiate tax holidays... We also have exemption for payment of holding taxes and we have guaranteed dividend payment and repatriation," Elias Mudzuri told an African power conference. "We are coming up with a new culture where we are allowing a lot of private investors to invest and be able to repatriate their money, or sell their energy through Zimbabwe to all the SADC markets," he said.

Mudzuri said the tax holidays were not open-ended and could be short-term only.