KONKOLA Copper Mines Plc (KCM) is still receiving electricity from the Copperbelt Energy Corporation (CEC) without paying for the commodity, contrary to the Electricity Act, says CEC chief financial officer Mutale Mukuka.

And Mukuka says assertions that the utility’s power tariffs are three times higher above what the Energy Regulation Board (ERB) authorises are not true, explaining that CEC’s tariff structure falls within the acceptable parameters of the Act.

In an interview, Mukuka disclosed that KCM was still not paying its huge electricity bill owed to the Kitwe-based power utility, which had now crept over US $155 million by the end of the first quarter of this year, despite continuing to receive the commodity at its underground mine.

“They have refused to sign an agreement with us. Now, the Electricity Act actually provides that such an agreement should be in place, so they are actually abrogating on what the law provides for. They don’t have an agreement with us, they just want services without an agreement, and then, there’s a debt, which, in addition to the old debt, there are these services being provided; we are invoicing and because they don’t want an agreement, they are not even paying for that,” Mukuka revealed.

“They are not paying for the services we are providing because it’s our wires; they are connected to our grid, to our network and we have continued to have a crew of men to make sure that there is continuous supply of power because it’s an underground mine. So, all the services they are getting at the tail-end they are not paying for because we also don’t have an agreement, they have refused to sign an agreement. At the moment, it’s about US $156 million, but there are two components to it, the amount is going up by two things: the first one is that there is interest being charged on the old debt, and then secondly, a small amount relating to the downstream services being provided. So, the amount is going up by roughly US $1 million to US $1.5 million per month – a combination of interest and services.”

Asked what remedy the utility would now seek to rectify non-payment of the mounting electricity bill, Mukuka said the company was still pushing for a mutually-acceptable solution, but did not rule out the prospect of litigation.

“At the moment, our priority before was to try and engage (them). You’d hope that everyone on the table will be reasonable; you can engage, discuss and come up with a solution that works. But if all of that fails, it means that the only option that you have on the table is to seek legal recourse. So, definitely, with where we are going, that will be the next course of action,” he replied.

“We are in business, we need to provide a service and someone should pay for it; it’s something that needs to be addressed sooner rather than later.”

And he explained that CEC’s power tariffs were not three times higher above what the ERB authorises, contrary to a misconception, as its tariff structure fell within the Electricity Act.

According to the Electricity Act No. 11 of 2019, section 34, subsection 3, a licensee shall not charge a consumer a retail tariff that is higher than the retail tariff approved by the ERB.

In section 35, subsection 1, a licensee who intends to vary a retail tariff shall apply to the ERB in the prescribed manner and form, while in subsection 2, the ERB shall, in considering an application under subsection (1) to vary a retail tariff, have regard to — (a) the amount of electricity consumed; (b) the uniformity or regularity of demand; (c) the time when or during which electricity is required; and (d) the expenditure on the generation transmission, distribution or supply of electricity.

“I saw the story (reported in the media) and it’s good you’ve raised it. My reading of that story was slightly different; if you look at the cautionary or market announcement which we issued, in there, we said that the ERB went ahead, prescribed a tariff, which is equivalent to 30 per cent of our standard tariff. Remember, this is a matter, which went to the High Court and the ERB and the government lost because what the ERB did in defining the tariffs, there is a section under the Act, which provides how you can charge a tariff. But the ERB, in the case of CEC when they tried to sort of direct a tariff, they went to their data base and said, ‘oh, we’ve picked in the database someone in the Southern African Power Pool (SAPP) this tariff so this is what we are picking…’ Now, under the law, they are not allowed to use a database; it’s like I just say…‘You are selling maize here, in my database someone in Rwanda was selling maize at this price so I am giving you this price.’ But ideally, what should happen if you are computing the price of maize in the example I have given, you should look at the input costs for Zambia because it costs differently from say, Rwanda,” said Mukuka.

Meanwhile, efforts to get to KCM Provisional Liquidator Milingo Lungu for comment on the status of the mining giant’s payment schedule to CEC proved futile as his phone went unanswered by press time.

KCM has been reorganised and restructured into two subsidiary companies, namely KCM SmeltorCo Limited and Konkola Mineral Resources Limited, which took effect on February 1, 2021, in a bid to increase efficiency, foster optimisation and boost business opportunities.

However, the mining company’s parent company, Vedanta Resources, had warned following its loss in a lawsuit where it sued Milingo over the splitting of the companies that the move would have grave financial consequences for the State.

In March, this year, KCM announced that the first instalment of staff redundancy packages due to employees, who had crossed over to the newly-created SmeltorCo Limited and Konkola Mineral Resources Limited, were paid on March 25 ahead of the originally scheduled date of March 31.