July 15, 2024
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CEC | 2019 annual report released

The Directors of Copperbelt Energy Corporation PLC (“CEC”) are pleased to announce the release of the annual report for the year ended 31 December 2019. Below is the Chairman’s Statement:

I am pleased to report that the Company, in 2019, once more proved its resilient character anchored on a solid business foundation and continuing hard work. This is amid heightened risks related to payment default by our largest customer, KCM, and the urgent need to resolve the future of our sourcing contract, the BSA, as it comes to an end at the end of March 2020.

External environment

Globally, themes that dominated the economy include the trade war between the United States and China, rising trade barriers seen through trade and technology tensions, continued Brexit related uncertainty, investing and spending uncertainty, social unrest and geopolitical tensions which agitated energy prices. Combining common influences across countries and country specific factors resulted in global growth showing its weakest pace, at 2.4%, since the financial crisis a decade ago.

Here at home, a debilitating drought in 2018/2019 combined with other factors to cause low crop production, higher food prices and reduced energy output. Amidst rising inflation, a weak currency and a contraction in mining activity, Zambia’s growth rate slumped to its lowest in three-and-a-half years. Of these, the most telling on the business were insufficient energy and decreased mining industry activity.


Following on from some of these factors, the business was faced with a significant payment risk consequent on the failure by our customer, KCM, to pay for power supplied to them. Considering that KCM accounts for at least 40% of our revenues, the impact of this debt on the business, as would be expected, is significant and remains one that we still need to resolve given its negative impact on the financial performance and wellbeing of the Company. Negotiating key commercial contracts that neared their end of life remains a top priority for the business, for which engagements with all relevant stakeholders will be continuing in the coming year. I have provided more detail on this in the section where I discuss significant events that occurred after 31 December 2019. Reduced load uptake by three of our customers – KCM and MCM who undertook overhauls for part of their plant, and Chambishi which was placed under care and maintenance during the second half of the year resulted in CEC making less power sales to its mining customers in Zambia compared to 2018. The Managing Director covers these issues and how we dealt with them comprehensively in his message.

Strategic performance

Management, working very closely with the board, commendably steered the Company on the set strategic path, encompassed in our 5-year strategic plan for the period 2017 – 2021 in which we endeavour to focus our energies on optimally managing our assets, growing the business, securing cost-optimized, diverse and reliable sources of power and cultivating positive relationships with our stakeholders.

To this end, we continue to pursue opportunities for growth as we looked in-country and externally for prospects that are a good fit with our strategic plan and represent quality growth for the Company.

Network optimisation: our power infrastructure and assets make up our manufactured capital and the core on which the business is built. We continued to invest in enhancing the efficiency, capability and integrity of our network from different angles, including technology, for evolvingly better service delivery and customer experience. We are satisfied that we met the reliability and availability metrics by which we measure the quality of service we provide to our customers.

DRC market: having incorporated the local company, CEC-DRC SARL, in 2018 as a vehicle through which the Company would grow its service provision to its customers in the DRC, we are pleased that we are now maintaining a permanent physical presence in that market; allowing us to lock in several contracts for power supply to support mining operations in the Katanga Province and enable us to increase our sales volume over the previous year.

Renewable energy projects: in our 2018 performance review, we reported that we were committed to developing renewable energy resources and would pursue and participate in both private sector initiatives and Government-led programmes. GET FiT Zambia is one such public sector program we expressed our interest in and got our legs in both the solar and hydro tenders. CEC and its partner, InnoVent SAS of France, were among the six consortia awarded to develop solar PV sites of up to 20MW each. CEC and InnoVent are developing two sites in Kitwe’s Garneton area. CEC is also participating in GET FiT Zambia’s small hydro tender under which the Government is looking to develop up to 100MW from plants whose capacity would not exceed 20MW. The Company was granted feasibility study rights for the two sites it submitted. We are also interested in a hybrid renewable power project combining solar, wind and battery storage which is coming up in Masaiti District. CEC penned a Memorandum of Understanding with Upepo Holdings for the development of this ground-breaking 150MW project, scalable to 250MW. These opportunities feed into our strategic objective of enhancing our contribution to growing Zambia’s renewable sources of energy as we seek to increase access to electricity across the country.

Relationships: our business and social universe is made up of numerous stakeholders that we hold key to our success and sustainability. Hence, a significant amount of both board and management time was spent engaging these relationships, especially with GRZ, as we seek to resolve the Company’s contractual arrangements going forward and lobby for more government support and improved relations for a more successful private sector in our country. In line with our values, we maintained the relevant disclosures, transparency and ethical conduct in our communication and interaction with our various stakeholders, including shareholders, as demanded by ourselves and by the rules and regulations that govern our business. It is also gratifying to see the impact and results of our recent social investment in education, health and infrastructure take shape and start to bear fruit.

We remain resolute in our intentions to not only ensure that we are moving along with our strategy but also that we adequately accommodate any variations that may result from changes in our environment in a manner that the end goal is kept in sight and achieved.

Business sustainability

A sizable portion of management and board time and resources were spent on matters related to the future of the Company’s contractual arrangements on the supply side as the BSA, in place since 1997, was due to lapse at the end of March 2020. By the close of the year under review, the parties had not come to an agreement on the future of that contract.

Admittedly, this state of flux is raising concerns on the stability of both the energy and mining sectors. We are continuing to engage with all relevant parties and remain keen on ensuring that these efforts culminate into a positive and non-disruptive outcome for the Company, the energy and mining sectors, and the country at large. Achieving a landing on a solution that’s mutually acceptable to all parties will ensure that both utilities focus the right energies on delivering quality service to their customers, free from uncertainty.

The foregoing, alongside other potential risks to the business, are critically identified, assessed and monitored. Appropriate mitigating actions are determined to manage any identified risks on an ongoing basis. I am pleased to report that in 2019, we worked tireless to contain all the risks identified as being plausible. The board was satisfied with the independent assurance received on the effectiveness and adequacy of the Company’s internal control systems.

These controls extend to our HSES activities which, collectively, seek to attain an operating environment in which no harm or occupational ill-health comes to any of our employees, contractors and the communities in which we operate. A tall order by any standards but which we have proved is achievable. I, along with the entire board, applaud an all-round praiseworthy performance in 2019. Not only did we attain 6.541 million man-hours without a system-based lost time accident but this accomplishment stretched the period the Company has gone without registering a fatality to 11 years.

I salute all our employees for consciously contributing to this achievement which both builds upon and shows the fruit of unrelenting collective pursuit of excellence in HSE sustainability.

That admirable attitude on the part of our employees extended beyond matters of HSE but to how they have professionally and steadfastly continued to execute their duties even under the challenging business environment which I have earlier addressed. In this vein, a part of our people engagement undertakings dealt with addressing anxiety by filling any information gaps through regular official communication with all employee levels.

Stakeholder relationships

Enhancing our relationships and partnerships is one of our strategic corporate objectives and, to that end, we endeavoured to listen to and engage with as many of our stakeholders as we possibly could.

Our vision of investing in and developing energy infrastructure and resources in a diversified energy industry is only possible with the support of the government. Hence, like any private business entity, building a good relationship with the government anchored on fair and transparent play is cardinal. We remain hopeful that the government will continue to work to enhance a supportive business environment in which the private sector can thrive so as to continue to contribute to the country’s economic growth.

We are interested in our customers’ business continuity. We endeavour to provide them a quality of service that assures them of security for their decisions. We sought to deliver that comfort, firstly, by not falling short of the level of service they require and devising solutions to serve their needs. We continued to engage on pertinent matters regarding our service offering, mutual interest as well as those with a broader reach affecting our respective businesses.

We continued to proactively, and in accordance with good governance rules and observation, engage with our shareholders. The capital market endured a generally bearish disposition throughout the year, hence, I’m pleased to report that the CEC stock, while having registered some capital losses, held up well under the circumstances and was one of the most actively traded on the LuSE in 2019. A total dividend of USD30.9 million was distributed to our shareholders in 2019, up 19% from 2018.

Our investments in the social sector were far-reaching and focused on health and education, consistent with our policy. Our partnering with the Office of The First Lady of the Republic of Zambia and her Esther Lungu Foundation Trust contributed to deepening our reach.

Governance and leadership

Our resolute commitment to transparency and adherence to the relevant governance tenets practiced by our board and management is a point of delight for me especially that what we are practicing now lays a foundation upon which those that will govern and lead our Company in future will rely. Both the executive and the board have acted in respectful reciprocity in sharing information and knowledge, rendering support and showing openness to counsel whenever called for.

We welcomed to the board a new representative of GRZ, Mr. Trevor Kaunda, who took over as Permanent Secretary in the Ministry of Energy, by virtue of which role he has assumed a seat on the board in accordance with our Articles of Association. I wish Brigadier-General Emelda Chola, longserving on our board, all the best in her future undertakings. I have every confidence that Mr. Kaunda will add to the collective skill set, expertise, talent and knowledge embodied within the relevant diversity in the composition of our board. I believe our board is well-equipped to continue steering the business forward and to render the needed leadership as the Company delivers sustained value to its shareholders and other stakeholders.

Events post the reporting date

Earlier in my review, I mentioned matters yet to be resolved relating to negotiating of key commercial contracts on the supply side, the debt by KCM that remains unpaid and a generally difficult energy and mining sector operating environment. On 31 March 2020, the contract by which CEC purchased power from ZESCO came to an end without the parties having reached a resolution on future power sourcing arrangements. Following on this, the agreement under which KCM purchased power from CEC ended on 31 May 2020, putting in motion actions by GRZ, ZESCO and ERB whose full effect has constrained the Company in terms of collecting the debt from KCM and taking other actions to preserve the commercial and financial viability of the business. KCM has, from 1 June 2020, signed a one year power supply term sheet with ZESCO while the relevant contracts for use of the CEC system which should determine the basis upon which the Company’s infrastructure is being used remain inconclusive. This follows the issuance of SI 57 by the Minister of Energy on 29 May 2020 to declare all of the Company’s lines as common carrier. The Company is pursuing avenues open to it to resolve the matters, including negotiating with the relevant parties. ZESCO and KCM have taken legal action against CEC in the courts of law against certain of these matters, and the Company is taking adequate steps to defend itself.

Going concern

The developments of challenging significance that I’ve highlighted present a level of uncertainty requiring special mention with respect to the Company’s going concern outlook. The Directors have, as part of the going concern review, considered the Company’s trading forecasts and working capital requirements for the foreseeable future, and have taken into account the various obligations of the Company to its lenders. Based on the sum total of our consideration of what actions CEC is taking and mitigations in its control to navigate the risks, we took the view that the business will continue to operate as a going concern into the foreseeable future. The Directors’ Report, Chief Financial Officer’s financial sustainability report and the financial statements all carry details on the Company’s going concern.


The National Energy Policy was approved by the government during the year under review. The two anchor sector bills, the Electricity Bill and the Energy Regulation Bill, went before the National Assembly for enactment, a process concluded post the reporting date following the presidential assent. The cost of service study resumed under the ERB and we are participating in the process. We believe these sector-specific developments will affect, and are already affecting, the business in different ways. We remain tuned to and involved in these processes and I trust that we have positioned ourselves to respond in a manner that will protect the interests of the business as the new legislation and other changes take effect.

Our ambition to play a broader role in the offtake and sourcing of power remains. We will continue to pursue opportunities both from private sector-led initiatives and government programs, and look forward to successfully participating in the GET FiT Zambia Small Hydro Tender for which we were pre-qualified in 2019.

The Southern African region remains of interest to the Company and having settled into the DRC, we look forward to extending our footprint in that market and locking in increased value from new contracts as well as existing customers.

The COVID-19 pandemic has taken a toll on business and life in general. While the full impact remains to be assessed, it is clear that some of the gains rolled back may take a very long time to recoup as is already being seen by the recessionary trends hitting global economies. On a Company scale, we have made paramount the safeguarding of employees by adopting measures that attempt to limit disease contraction so that the health of our employees is preserved for when a semblance of normalcy returns to the business. In the interim, our employees are working remotely or in staggered teams among other prevention measures. We are mindful that the impact of COVID-19 extends to our supply chain, customers and contractors whose performance in one way or another affects the business. Hence, we are keenly watching how they navigate this health crisis to enable us effectively respond to any potential systemic risk.

Appreciation and conclusion

Wholeheartedly, I salute the continued guidance, wisdom and skills of each member of our board. Your professionalism, insight and advice enabled the executive to apply themselves so as to ensure the value-creation and sustainability mandate they are tasked with is achieved and preserved.

The heroes and heroines who are our employees are truly our greatest assets. They continued to commend themselves well, upholding the same dedication with which they have held themselves in years past while holding themselves open to protect and live by the values that define the Company’s character. I look forward to working with you all again in the coming year.

London Mwafulilwa

Related download

CEC | 2019 annual report.pdf

about CEC

Copperbelt Energy Corporation is a Zambian-based power infrastructure solutions provider. It supplies reliable, cost-effective power to industrial, commercial, and residential customers across sub-Saharan Africa.

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