The Copperbelt Energy Corporation says negotiations for a new bulk supply agreement with ZESCO failed because of some new proposed terms that the government is demanding which if accepted, would be injurious to its operations.
CEC has confirmed the end of its long term power purchase agreement with ZESCO effective 31st March 2020 bringing an end to a 23-year contract.
CEC Corporate Communications Manager Chama Nsabika said in a statement that while the initial understanding was that the two parties involved would work to put in place an interim agreement, it became clear during the negotiations that the intention was to agree a wholesomely new agreement with totally different terms.
Ms. Nsabika has charged that CEC has held its end throughout this period and approached the negotiations in good faith and that narrowing the negotiation gap aimed at achieving a mutually acceptable power supply agreement is of strategic importance to the electricity sector and the country.
She says CEC will however continue providing seamless power supply services to all mining and non-mining consumers on the Copperbelt during the negotiation period for a new power supply agreement, barely 24 hours after energy minister Mathew Nkhuwa directed that no power interruption should occur to the Copperbelt with power supply to continue under Zesco terms.
“Additionally and most importantly, it has come to government’s attention over the last few days, that CEC is in fact not even willing to sign an agreement with a twelve (12) month tenure, which has been the basis of all negotiations conducted by the two parties over the last seven (7) weeks and, which was initially proposed by Government and ZESCO”.
CEC admitted that the negotiating parties were unable to agree to a number of terms by the last day of the contract.
“At end of day on 31st March 2020, the parties had not reached agreement on account of certain terms seen as key requirements from either side and which so far are not acceptable to either party”.
CEC believes that agreeing to some of the terms would affect the company’s financial performance.
“On its part, CEC has faced some terms being demanded by the GRZ team which, if accepted, would be injurious to the CEC business and impact its ability to continue operating as a going concern”.
Issues related to financial performance related to how much the product electricity is sold by either negotiating party and what are acceptable margins.
The interim average mining tariff was determined at US$9.3/kWh effective January, 2017, pending the conclusion of the cost-of-service study.
“In CEC’s view, achieving a mutually acceptable power supply agreement between the parties remains of strategic importance to the electricity sector and the country. Therefore, CEC remains confident that the parties will use the next several weeks to narrow the negotiation gap so as to achieve the much-required new power supply agreement between them”.
PF deal with The Post is dead.
PF deal with Prime TV is dead.
PF deal with CEC is dead.
PF deal with Zambians is dead.
The deal is over so move on. CEC was a parasite institution, the only lesson Zesco can learn from them is their efficiency. Their 2% transmission loss can’t be compared to Zesco’s 20%. It’s clear that Zesco is run by damn idioots
ZESCO is a PF cash cow and cader dumping ground…….ZESCO Zia’s failed Zambians despite having a generation and transmission monopoly for decades ……this thing called ZESCO is failing.
Break it up into generation and different transmission companies.
Power cost is 9.3 cents/kWh…not $
But what are the issues poor reporting.
Just pay normal rates like other companies and citizens do.You as CEC got used to buying cheap power from ZESCO for 23 years and you cannot come to terms of paying like all of us.Time value for money states that value for money changes with time….ZESCO cannot continue supplying cheap power to CEC-never!!Plus signing deals for 20 yrs,10yrs,5 yrs is not economical because so many things change during that period.Short term deals are benefitial to Govnt in my view.CEC has no option but go for a short term contract.Imagine if all of us in Zambia signed 20yrs power contract with ZESCO and tariffs remain unchanged for 20yrs,what would happen to ZESCO?let CEC be real!!I support Govnt stance on this one!
Our negotiating team had the zambian people’s welfare at heart. If you can’t agree to a deal which leaves our people in a better position ,then all we can say is good bye and good luck.
Whats wrong with having a new agreement with totally different terms? Remember imwe ba CEC, in the past you have enjoyed free money. The govt is saying the status quo cannot continue. So be ready for new terms. If you used to pay 50 ngwee per share as dividends, be ready to start paying 6 ngwee per share. You have no product to sale.
CEC didn’t transmit power over long distances compared to Zesco. It’s therefore expected that there transmission loss would be less than Zesco’s. In fact they don’t do much transmission but distribution to customers.
It’s Zesco united’s plan to destroy Power Dynamos
Everyone knows the deal was dead …govt told us last year now what is your plan B for your shareholders are you going full-out into renewable energy and bio-energy? Are you going to enter the retail market to supply domestic customers …these are issues will want to hear not being a middleman you can only go so far with such a business plan.
Pa Chilata – there is more to life than that rubbish …covid-19 has proved that to you!!
Zambian people did not benefit for 23 years I wonder if they will benefit if CEC was taken by Zesco ????.And just a question was paying Zesco or not and if it was paying did the Zambian people in that small way?
It does not make sense to have CEC getting electricity at low price and then supplying it at a higher price. I commend GRZ for refusing that useless deal. Let ZESCO supply directly and the money will go to GRZ period. This case is closed.