ZESCO Limited has denied conspiring with Energy Minister Matthew Nkhuwa and Konkola Copper Mines (in liquidation) to injure the Copperbelt Energy Corporation’s business following the Minister’s decision to declare CEC’s transmission and distribution lines as common carriers.
Zesco has submitted that it, rather, exercised its legal right to enter into a Power Supply Agreement (PSA) with KCM to supply power and wheel the power using CEC’s infrastructure which was duly declared a common carrier by the powers given to the minister via Statutory Instrument No. 57 of 2020.
And ZESCO adds that it is not liable to the sum of USD144 million arising from the trade between KCM and CEC as it was not party to the contract in issue.
In this matter, ZESCO Limited and KCM have sued CEC in the Lusaka High Court, seeking a declaration that CEC’s action to restrict power supply to KCM contravenes the law.
ZESCO and KCM are seeking an order of injunction restraining CEC by itself, its Directors, Officers or agents from interfering in the Time Sheet Agreement between ZESCO and KCM through restricting KCM from receiving supply from ZESCO pending determination of the matter.
They also want, among others, an order restraining CEC from effecting or taking steps to take out any supply units, lines or delivery points to KCM as they are Common Carriers as declared under S.l. No 57 of 2020.
But in its defence, CEC argued that ZESCO and KCM were not entitled to the reliefs they were claiming or any relief at all.
It also counter-claimed, citing ZESCO, KCM and KCM Provisional Liquidator Milingo Lungu as first, second and third defendants respectively.
In its counterclaim, CEC is seeking an order that ZESCO Limited pays it USD 144 Million as compensation for the power supplied to KCM which it could not recover due to the conspiracy between ZESCO and KCM.
It is further counter-claiming a declaration that the KCM Provisional Liquidator’s refusal or failure to settle the sum of USD 144 Million owed to CEC is in breach of Lungu’s statutory duty to CEC.
CEC is further counter-claiming, among others, compensation for loss of its income following an abrupt end to negotiations between it and KCM for renewal of the PSA, and an order that ZESCO pays it by way of compensation, the value of the power supplied to KCM from June 1, 2020 until date of judgement.
It has argued that Nkhuwa’s decision to declare its transmission and distribution lines as common was the epitome of the conspiracy between ZESCO and KCM, and the Energy Minister.
But ZESCO in its reply and defence to CEC’s counter-claim, denied that CEC was entitled to the reliefs sought in its counter-claim.
It stated that it had continued to sell power to CEC, but added that the trade was not based on any agreed and executed PSA but on a schedule of supply Terms given to CEC before April 1, 2020, which supply Terms were received and acknowledged by CEC.
ZESCO stated that at no time did it impose non-negotiable and unilateral terms to CEC but rather proposed commercially viable terms commensurate to its operational costs of generating power.
“The first defendant (ZESCO) shall aver that it did not impose onerous on the plaintiff (CEC) but proposed terms of its trade with CEC in good faith. Both parties independently exercised their freedom of contract to enter or reject the terms of the Power Supply Agreement,” it stated.
“ZESCO did not impose terms for the PSA but rather proposed terms that are commercially realistic to which CEC was obliged to accept or reject. ZESCO is not the only player in the energy sector and cannot be held at ransom to agree to terms that are not commercially viable as that would hinder its operations to provide quality and reliable power supply to CEC and the nation.”
ZESCO argued that its conduct did not amount to oppressive bargaining at all as CEC wanted to continue receiving power on the same old terms of the expired Bulk Supply Agreement which lasted for 23 years and proved unsustainable and onerous on ZESCO.
It stated that it had continued to supply power to CEC but denied that it was supplying the power on the same terms of the expired BSA.
ZESCO stated that it was not aware nor privy to the negotiations of CEC and KCM with regards to the renewal of the PSA.
“The first defendant shall aver that it did not conspire with the Minister nor KCM to injure CEC’s business but rather exercised its legal right to enter into a PSA with KCM to supply power and wheel the power using CEC’s infrastructure which was duly declared as common carriers by the powers given to the minister via Statutory Instrument No. 57 of 2020,” it stated.
“The particulars of conspiracy are not only baseless but malicious and in bad taste. ZESCO entered into the term sheet with KCM in good faith like any other customer that wanted to buy its power. CEC was adamant and insisted on maintaining the expired terms of the BSA which were not commercially viable to ZESCO thereby frustrating the whole process of negotiations.”