CEC welcomes dismissal of Joint ZESCO/KCM Interim Injunction
The Copperbelt Energy Corporation Plc (CEC) welcomes the discharge by the Lusaka High Court of the interim injunction that had been granted on 3 June 2020 to ZESCO Limited (ZECSO) and Konkola Copper Mines Plc (KCM) against CEC following a joint ex parte application by the two parties.
ZESCO and KCM applied to the court to restrain CEC from “interfering” in a power supply arrangement between them by restricting power to KCM following the expiry of the power supply agreement between CEC and KCM. KCM then contracted to be supplied by ZESCO using CEC’s transmission and distribution infrastructure.
“CEC has always held the view that commercial agreements should be honoured and respected in the interest of all businesses, their investors and all other stakeholders. We reiterate that the parties should engage in constructive dialogue to resolve these matters and remain expectant that KCM will come to the table with workable solutions on the discharge of their outstanding USD144.7 million debt to CEC. It is also important that firm agreements underpinning transactions in both the energy and mining industries should be in place for the proper functioning of the sectors and entities, and to engender certainty for commercial decisions,” stated Managing Director, Owen Silavwe.
This ruling follows the dismissal by the Kitwe High Court, on 31 July 2020, of the interim injunction brought by KCM against CEC to restrain the Company’s then intended restriction of power to KCM for failure to pay its outstanding debt to CEC for power it was supplied and consumed.
CEC takes note of the two rulings and hopes all the parties will take the opportunity to engage in good faith and resolve all the outstanding matters, including the debt and the commercial contracts, without which it will become more challenging for the Company to continue to provide reliable service.
CEC commenced the process of discontinuing power provision to KCM following multiple attempts to resolve KCM’s outstanding debt in unpaid electricity charges, which stood at USD144.7 million on 31 May 2020 when the contract between the parties expired. KCM made no attempt to settle its debts since December 2019 and, therefore, left CEC no choice but to protect its commercial rights and preserve the value of its business.
CEC notified KCM on multiple occasions that their power would be restricted if they failed to settle their electricity bills. According to Clause 13 (d) of the Power Supply Agreement between the two parties, CEC had the right to suspend power supply if the debt remained unpaid in excess of 45 days. The last payment made to CEC from KCM was in December 2019.
The restrictions took place on 1 June 2020, one day after the Power Supply Agreement between the two parties had lapsed. As the recent court ruling has now shown, there was no evidence of irreparable damage to the mines. The restrictions maintained a minimal supply of power to the mines at all times and was coordinated with the KCM technical teams in advance in order to protect both people and assets. The restrictions lasted for a few hours until government representatives asked CEC to renew full power.
About CEC
The Copperbelt Energy Corporation Plc (CEC) is a licensed independent power generation, transmission, distribution and supply company whose core business is the supply of power to the copper mines based in the Copperbelt Province of Zambia and some mining companies in the DRC in conjunction with that country’s state utility, SNEL. CEC wheels power through its network on behalf of ZESCO Ltd on the Copperbelt, owns and operates a transmission interconnection with the DRC, over 1,000 kilometres of high voltage transmission lines and 43 substations across the Copperbelt.
CEC has five incorporated subsidiaries – CEC-Kabompo Hydro Power Limited (CEC-KHPL), CEC DRC Sarl, CEC-InnoVent South, InnoVent-CEC North and Power Dynamos Sports Limited (PDSL). CEC-KHPL is the special purpose vehicle through which CEC is developing the 40MW Kabompo Gorge hydroelectric power project in Mwinilunga District of the North-Western Province of Zambia, while CEC DRC Sarl is a special purpose vehicle incorporated to secure the power trading segment and grow the Company’s interest in the DRC market. PDSL is a special purpose vehicle which runs Power Dynamos Football Club.
CEC is listed on the Lusaka Securities Exchange and is a member of the Southern African Power Pool.
