CEC acts in good faith over Konkola Copper Mines impasse

The Copperbelt Energy Corporation Plc (CEC) has, in good faith, decided to restore full power supply to Konkola Copper Mines Plc (KCM) today, 26 September 2014, in a bid to restore normal business relations, despite KCM not having fully discharged its financial obligations to CEC.

It is our hope that in response to this show of good faith, KCM will pay all its outstanding bills and begin to pay all their future bills as they fall due. CEC believes it is important that all parties take learning points from this incident and begin to uphold obligations in accordance with the Power Supply Agreement (PSA).

Irrespective of this decision, CEC still reserves all its rights per provisions of the PSA with KCM, which rights CEC will exercise should it become imperative to do so in the near future.

CEC reiterates that throughout the dispute, it has continued to supply uninterrupted electricity to KCM and the restriction effected on 20th September 2014, agreed upon with KCM as set out in the PSA, only affected the concentrator related loads, which account for about 10% of KCM’s power requirements. This means that KCM has been receiving about 90% of its power requirements from Saturday, 20th September 2014 to date, contrary to claims of further power restrictions having been effected. The restriction is a planned and coordinated process not effected in a haphazard or reckless manner but in accordance with PSA stipulations. The PSA confers rights on CEC to leave KCM with only about 14 – 17% of power supply in cases where KCM persistently defaults on its obligations, as has been the case. In no way did CEC come close to fully exercising its rights on this occasion.

It must be appreciated that KCM’s refusal to make payments against invoices issued for about six months, even on undisputed amounts, has adversely affected CEC’s business and subjected CEC to subsidizing and sustaining KCM operations for the said period. As a consequence, CEC has also been unable to fully discharge its obligations to ZESCO. Notwithstanding their continuous defaulting on payments, KCM also argues that they are not liable to pay interest; in complete contravention of the PSA. All this is unacceptable in normal business practice and should not be encouraged. CEC has lately received a total of US$24 million, being KCM’s partial compliance with Orders of the Court directing it to settle its indebtedness. It is not right for any business that means well to wait for court orders for them to pay for services consumed.

It is CEC’s hope that KCM will fully comply with the Court orders and commit itself to reaching a settlement on this matter. This commitment has so far been lacking from KCM but is critical to enable the parties move forward. This is imperative to prevent a return to the events of the last few days.

ENDS

For further information, contact:
Chama Nsabika-Kalima
Senior Manager Corporate Communication
+260 212 244914/211 261298
+260 966 792922
[email protected]

NOTES TO EDITORS

About CEC

The Copperbelt Energy Corporation PLC (CEC) is an independent power transmission and distribution company, with interests in closely linked businesses in Zambia and the African region, including optic fibre based telecommunications. A member of the Southern African Power Pool and listed on the Lusaka Stock Exchange, CEC has a deep insight into the mining industry, enabling it to provide quality electricity and other power products and services to the majority of the mines in Zambia for over 50 years. CEC is well positioned as a developer of energy infrastructure in Africa and is respected in the region for its skills in designing and operating transmission systems.

The Company owns and operates over 1,000 kilometres of high voltage transmission lines and 41 substations covering all towns in Zambia’s mineral-rich region of the Copperbelt, and owns the Zambian portion of the electricity interconnector with the Democratic Republic of Congo, which enables transportation of power within the Southern African region. CEC accounts for over 50% of Zambia’s power consumption. CEC has emerged as an independent power generating company with some strategic generating projects in development and in the pipeline from a diversified energy source mix, including hydro, biomass and solar.