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Alba Iulia
Thursday, July 2, 2020

CEC KCM Saga: Government steps in to supply Power to KCM using CEC Infrastructure

Headlines CEC KCM Saga: Government steps in to supply Power to KCM using...

Copperbelt Energy Corporation says it will stop supplying power to Konkola Copper Mines Plc (KCM) from today after talks on extending their supply agreement broke down over debt owed to CEC.

Energy Minister Mathew Nhkuwa said in a statement that KCM would now get its power directly from state-owned utility Zesco Ltd, which until now has sold electricity to CEC for onward supply to KCM.

“The power supply agreement between Konkola Copper Mines and Copperbelt Energy Corporation (CEC) is coming to an end at midnight tonight (Sunday). However, despite this development, let me assure the nation that there will be no power disruption to the mine. On 29th May 2020, I issued Statutory Instrument No. 57 of 2020 declaring all transmission and distribution lines operated by the CEC as a common carrier. This means that this infrastructure is now available to other players in the electricity market to use for commercial purposes at agreed terms and conditions by the parties. I exercised this power pursuant to section 15 of the electricity act no. 11 of 2019,” Mr Nkhuwa said.

“Let me emphasise that this infrastructure still belongs to CEC and will be accessed by other parties at a fee and on agreed terms and conditions,” he added.

“Lastly, let me remind all actors in this matter that mining is a strategic industry to the economy of Zambia and I expect all parties to act in the national interest. The government therefore urges all the parties currently in discussion to conclude the negotiations as quickly as possible. While the negotiations are going on, power supply to the mine must continue.”

But CEC said the power supply agreement with KCM which came to an end on March 31 and was only extended through mutual agreement until May 31.
CEC said KCM owes it $132 million in debt.

“Negotiations for its further extension have broken down, despite CEC’s best efforts in good faith towards securing a new contract,” the statement said.
“Without a renewed contract in place, CEC cannot continue supplying power to KCM as doing so would jeopardise the Company’s financial position and endanger its efforts to provide essential power supply to its other customers,” it said.

“CEC has informed KCM that its supply will be discontinued, after making clear throughout the negotiations that this would be the only option available should they fail to engage constructively in the negotiations and in resolving their substantial debt.”

In trying to agree the new contract, CEC sought to resolve KCM’s outstanding debt of $132 million as well as obtain a firm commitment from KCM regarding the timely payment of electricity charges going forward, it said.

CEC said it had informed KCM that its supply will be discontinued, adding that this was the only option available after the talks failed to resolve KCM’s outstanding debt and obtain a firm commitment from KCM regarding the timely payment of electricity charges going forward.

“Due care has been taken to make certain that the process of discontinuing supply ensures the safety of personnel and equipment and preserves the integrity of the mine,” CEC said.

A CEC Spokesperson said, “It is unfortunate that it has come to this. Over the past several months, we have made clear to KCM the consequences of their non-payment and their unwillingness to engage in negotiations in good faith. Sadly, they have chosen not to honour our previous agreement or pay the considerable sum that is owed. In order to protect our staff, our customers and all our shareholders, we have had no choice but to discontinue the supply of power. All efforts will be made to ensure that this is done in a way that protects the safety of both personnel and equipment.”

“KCM remains an important customer to CEC given that it is directly connected to and fed from the CEC power network at multiple points. This means that even if KCM signs a PSA with another provider, KCM will still require transmission and connection services from CEC. Like any other customer, KCM cannot exist on the CEC network without a form of connection services agreement with the Company. As a customer-centred business, CEC remains open to continuing to work with KCM and other parties that may be involved to negotiate and enter into the required transmission and connection agreements, should the need arise. CEC will continue to meet its core mandate of providing all such transmission and connection services at the best quality possible.”

While Zesco will now transport power to KCM, it will still travel through CEC power lines.

Mr. Nkhuwa said in an interview that CEC would be breaking the law if it refused to transport the power.

“I issued a statutory instrument on Friday declaring the CEC lines a common carrier. CEC is therefore obliged to transport the power from Zesco to KCM at a fee,” Mr. Nkhuwa said.

[Read 1,744 times, 1 reads today]

15 COMMENTS

  1. We all know that pf are not interested in the wellbeing of our local businesses. They killed the post, they killed prime tv, they have killed several other businesses to settle political scores, now they want to kill one of our few large, successful private companies. smh.
    This is, without doubt, the worst EVER government Zambia has ever, or will ever have.
    Am sure they will use force to grab the CEC infrustructure to supply KCM.
    Meantime chinese businesses must flourish. Disturb them and you will end up like miles sampa.
    “Zambia for chinese”!
    “More money in chinese pockets”!

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  2. Well done, honorable. Let the real generators of the power supply it!! CEC are now grid owners only. ZESCO is the main player who generate and transmit the power. ZESCO is a big employer that pays Zambians very well, so balekeni ba bombeko!!

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  3. Does financial ruin for CEC worry the govt? The relationship btwn CEC and KCM is a commercial one and governed by commercial rules. Di they want CEC to also default on its obligations to its lenders?

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  4. Pure dununa reverse! Zesco used to be paid be CEC for power. It would be nice to see how the defaulting KCM will be forced to pay Zesco under the new arrangement. This arrangement would just make zesco’s financial position even worse!! Where are the technocrats is this whole mess? Does it have to take a foreign lizard to exercise simple common sense? If we have fail to maintain the stolen “ilomba” may be it’s high time we returned it to the owner!

    Enough of foolishness in the name of fufu veve!! Let’s be serious!!

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  5. The growth of our local indigenous businesses is the only way to sustainable development. State-run Institutions are inefficient and will always struggle as they are used as a means to sustain the ruling party’s rule. More employees than they need, inefficient procurement these are just some of the problems they face.

  6. CEC is a just a maggot feeding on ZESCO. The maggot must be removed forthwith for te survival of Zesco .

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  7. We cannot continue having those UPND selfish individuals making millions from ZESCO and using the same funds to fund their poiltical party. Who does that!!

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  8. Hechi Hechi must come out clean on this. He accuses ZESCO of being inneficient . He wants ZESCO to be split into generation and distribution so that CEC gets the distribution part. It will not happen. CEC have had their time. Kya bebele.

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  9. That’s PF govt for you they will not sleep until this listed local company is in the ground meanwhile they owe this company $132 million….this is another court case waiting to happen. They would rather a Chink company takes over and brings all middle managers and labourers from China.

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  10. Now the chinese will be swimming from Livingstone express into the Copperbelt. Even their yellow skin will turn yellower-bleached by the PF gvnmnt.

  11. kalaba – If you disagree that ZESCO is not efficient then there is something terribly wrong with you …unbundling ZESCO is not straightforward but is necessary let them concentrate on generation and why shouldn’t CEC not get involved in distribution and retail the have over 20 years experience and they are a local company.

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  12. THIS IS THE END OF THE BIGGEST SCAM FROM THE PRIVATISATION OF ZCCM. SOME MANAGERS AT THE FORMER ZCCM POWER COMPANY CONNIVED IN BROUGHT DAYLIGHT TO GIVE THEM SELVES THE FORMER COMPANY AND THEN WENT ON TO MAKE THEMSELVES DOLLAR MILLIONAIRES AND ARE STILL WALLOWING IN ILL-GOTTEN WEALTH.
    THE SO-CALLED KCM DEBT TO CEC SHOULD BE PAYMENT FOR LOOTING THAT HAS BEEN GOING ON AND CANCELLED.
    ENOUGH IS ENOUGH

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  13. The fact of the matter is that CEC owns the transmission and connection infrastructure through which ZESCO supplied it’s power to KCM. They allowed this absurd arrangement to exist for years. ZESCO should have had it’s own such infrastructure by now to supply everyone directly. The minister’s regulation is in essence an attempt to ‘take over’ or ‘nationalise’ the property of CEC. Whether that has been pursued legally, is another matter. At the end of the day, this is another mess. These discussions should have been held long before the PF declared that they were ending the contract ‘come what may’, on the 31st of March.

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