Copperbelt Energy Corporation (CEC) Plc says it geared to tap into the Southern African Power Pool (SAPP) as an alternative source of electricity, should its Bulk Supply Agreement (BSA) with Zesco Limited not be renewed.
And CEC says it cannot restrict electricity to Konkola Copper Mines (KCM) Plc as it has done in the past to defaulting clients for unpaid invoices because the mining company has started making some payments.
The BSA between Zesco and CEC is a 20-year agreement that underpins power supply to the Copperbelt and it is set to come to an end in March, 2020.
Ministry of Energy Permanent Secretary Trevor Kaunda disclosed that the BSA will not be renewed.
“Government made a decision earlier in the year, if you have been following the news, that when the Bulk Supply Agreement that is existing now comes to an end in March, next year, it shall not be renewed. I think that is the Cabinet decision that was made earlier in the year. It’s not a rumour, that’s just what it is. So, those are now the discussions that are taking place between the parties. Post-March, 2020, how does supply in the Copperbelt and, indeed, other areas look like? That’s the discussion which is in place, and at an appropriate time, the nation shall be updated once those discussions are concluded because, basically, we still have the rest of December up to March for those discussions in terms of the outlook,” Kaunda said in an interview in Lusaka.
But responding to a press query for an update on CEC’s progress on its BSA with Zesco, CEC senior manager corporate communication & investor relations Chama Nsabika stated that the Kitwe-based power utility was geared to tap into the regional market through the SAPP, the cooperation of the national electricity companies in southern Africa, as an alternative source of power should the stalemate with Zesco over its BSA persist.
“The alternative source of power would be the regional market. CEC has bilateral Power Purchase Agreements (PPAs) with regional utilities and can, if necessary, access some of this power to benefit the local market. Deploying this solution, obviously only makes sense in circumstances where the local market is unable to meet CEC’s requirements. It is cardinal that everybody recognises that the situation we are faced with requires concerted efforts at constructive engagement and putting in place a mutually acceptable solution in good time. CEC will continue to render quality service to all its customers, using its infrastructure and capabilities, to the benefit of both its mining and non-mining customers. While the solution to the BSA remains to be agreed, CEC believes that in time, a mutually-acceptable solution that safeguards the interests of customers and investors will be found,” Nsabika stated.
On the company’s ongoing dispute with Zesco over non-payment of retainers from power CEC sold to mining companies, Nsabika noted that the status quo remained.
“On 4th December, 2019, in accordance with the Lusaka Securities Exchange listings rules, CEC issued a further cautionary announcement advising the market that the matter is in progress and remains under adjudication. The status quo remains,” she added.
And Nsabika added that the company would not restrict power supply to KCM despite its outstanding debt for electricity supplied to the mine’s business units as it had started making payments.
KCM remained in receipt of power throughout this year despite its indebtedness to CEC.
“It is true that KCM remains CEC’s largest customer and any non-payment for power supplied has a negative impact, not only on CEC’s financial performance, but also on the financial well-being of the entire value chain; a fact we also reflected in our published half-year results for the period January to June, 2019. It is also true that any payment default would constrain CEC’s ability to meet its payments to Zesco. CEC has continued to work constructively with all stakeholders, including the government, KCM and Zesco in respect of the KCM situation and it is evident that all parties are committed to seeing a KCM that meets its payment obligations. KCM has since made some payment against the outstanding amounts. We, therefore, take the view that the option to restrict power is not necessary at this stage,” stated Nsabika.